2. Alliss Limited manufactures de-luxe juicing machines. Each machine has a wholesale price of £225. Variable costs of manufacture are £56 per machine. Because of increased competition, the sales director has reduced the level of sales that the company can realistically expect to make. The actual sales level in 2020 was 3561 machines, but the budget for 2021 is only 3250 machines. Fixed costs for the year 2020 are budgeted at £560 000. Advise the company's directors on whether they should increase the selling price.
2. Alliss Limited manufactures de-luxe juicing machines. Each machine has a wholesale price of £225. Variable costs of manufacture are £56 per machine. Because of increased competition, the sales director has reduced the level of sales that the company can realistically expect to make. The actual sales level in 2020 was 3561 machines, but the budget for 2021 is only 3250 machines. Fixed costs for the year 2020 are budgeted at £560 000. Advise the company's directors on whether they should increase the selling price.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2. Alliss Limited manufactures de-luxe juicing machines. Each machine has a wholesale price of £225. Variable costs of manufacture are £56 per machine. Because of increased competition, the sales director has reduced the level of sales that the company can realistically expect to make. The actual sales level in 2020 was 3561 machines, but the budget for 2021 is only 3250 machines. Fixed costs for the year 2020 are budgeted at £560 000.
Advise the company's directors on whether they should increase the selling price.
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