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Question 5 Green Ltd manufactures and sells a single product. The initial budget for the forthcoming period is:
The standard selling price is $90 per unit and tax rate is at 28%. Sales for the period are budgeted to be 800 units. The maximum production capacity for the period is 1,500 units.
Required: with solution method:
(a) Calculate:
o the profit after tax at budgeted sales level;and
o the amount of sales unit required in order to earn a profit after tax of $18,000 for the period.
(b) Compute:
o if Green Ltd reduced the selling price to $80, which will enable 1,000 units to be sold, how much is the profit aftertax?
o the amount of sales unit required in order to earn a profit after tax of $18,000 for the period.
- (c) Advise the management as to the best courseofaction.
