Question 1: A company is about to bring a new product to the market. The given budgeted data has been assembled:
£
Direct material cost per unit 30
Direct labor cost per unit 35
Variable overhead cost per unit 45
Selling price per unit 180
Fixed overheads allotted to the product 660,000
The first draft budgeted production and sales is 15,000 units.
The maximum possible output is 21,000 units.
TASKS:
a) Compute the first draft budgeted profit.
b) Compute the first draft budgeted break-even point.
c) The marketing department has carried out some market research and is convinced that if an extra £80,000 was spent on marketing sales would rise to 17,500. Compute the profit.
d) It is thought that if the selling price is raised to £200 per unit it would still be possible to sell 14,000 units. Compute the profit.
e) The production department thinks that by enhancing the quality and packaging of the product by spending an extra £5 per unit making the product, sales would increase to 16,500 units. The selling price would be kept at £180. Compute the profit.
f) Fully assess the above options.
Question 2:
a) Describe the budgetary control process.
b) Describe the significance of controlling inventory (stock) levels.
Question 3: Describe the benefits and drawbacks of mergers and takeovers.
Question 4: Describe four of the given:
a) Share issues
b) Cash budgets
c) Accounting standards
d) Gilt edged securities
e) Liquidity ratios
f) The potential dangers of high gearing
g) The role of a central bank