Please answer questions 8 9 10 Funai Corporation is a Japane

Funai Corporation is a Japanese manufacturer of video cassette recorders (VCRs) and was established in 1987. There is now increased competition in its markets and the firm expects to find it difficult to make an acceptable profit next year. You have been appointed as a management accountant at the company, and have been given a copy of the draft budget for the next financial year. Draft Budget for 12 months to 30th September 2019 (Em) (Em) 960 Sales revenue Cost of sales Variable assembly materials Variable labour Factory overheads-variable 374.4 192 172.8 fixed 43 (782.2) Gross profit Selling overhead - commission (variable) 38.4 - fixed 108 Administration overhead - fixed Net profit 20 166.4) 11.4 The following information is also supplied to you by the firm\'s financial controller, John Smith: a) Planned sales for the draft budget in the year to 30th September 2019 are expected to be 25% less than the total of 3.2 million VCR units sold in the previous financial b) The firm operates a Just-in-time stock control system, which means that it holds no c) If more than 3 million VCR units are made and sold, the unit cost of material falls by d) year stocks of any kind £4 per unit, Sales commission is based on the number of units sold and not on turnover.

Solution

Q8)Calculation of Contribution Margin as per the draft budget:

In Millions

Sales amount 960

Variable material 374.4

Variable Labour 192

Variable Fixed overheads 172.8

Variable selling overheads 38.4

Contribution=Sales-all variable costs

= 960-374.4-192-172.8-38.4

=182.4

No. Of Units to be sold as per draft budget= 3.2 million- 25%= 2.4 million units

selling price per unit = 960/2.4

selling price per unit= 400

Contribution per unit = 182.4/2.4

Contribution per unit = 76

Therefore as per the budget If as per the sales forecast, the company produces 2.4 Million VCRs: Contribution per Unit will be 76

If the company produces more than 3 Million VCRs the contribution will be as follows:

Sales price per unit: 400

Variable materials costs per unit: 156-4=152

Variable labour cost per unit: 80

Variable fixed overheads:72

variable selling overheads:16

Contribution per unit= 80

Therefore if the company manufactures more than 3 million VCRs, the contribution margin per unit will increase by 4.

Please submit question 9 and 10 seperately.