Case#2 Unilever Pakistan sells one product for which data is givenbelow: Particu
ID: 2444335 • Letter: C
Question
Case#2
Unilever Pakistan sells one product for which data is givenbelow:
Particulars Rs
Selling price per unit 10
variable cost per unit 6
Fixedcost per unit 2
Thefixed costs are based on a budgeted level of activity of 5,000units for the period.
Readthe above case study carefully and write down the correctoption
number (e-g A, B, C, D) in the given Excelfile
6.What is Unilever breakeven point in Rs of salesrevenue?
A.Rs.25, 00
B.Rs.25,000
C.Rs.5,000
D.Rs.50,000
7.What is Unilever breakeven point in units of salesrevenue?
A.25,000 units
B.25,00 units
C.50,000 units
D.5,000 units
8.How many units must be sold if unilever wish to earn a profit ofRs.6,000 for the period?
A.2,000 units
B.4,000 units
C.6,000 units
D.8,000 units
9.What is unilever margin of safety for the budget period if fixedcosts prove to be 20% higher
thanbudgeted?
A.60%
B.40%
C.33x1/3%
D.20%
10.If the selling price and variable cost increase by 20% and 12%respectively by how much
mustsales volume change compared with the original budgeted level inorder to achieve the
original budgeted profit for the period?
A.24.0% increase
B.24.2% decrease
C.37.9% decrease
D.37.9% increase
Explanation / Answer
I'll do it with proofs for ya!
1 and 2
SP - 10
VC - 6
CM - 4
FC - (2 x 5,000) = 10,000
Fixed Costs / Contribution Margin = Break-even in units
10,000 / $ 4 = 2500 units
2500 units x 10 = $25,000
Answer : in units of sales revenue? I'm thinking dollars.. So both are $25,000, or B
2. Target Ending Income = $6,000
SP - $10/unit
VC - $6/unit
CM - $4/unit
FC - $10,000
OI = $6,000
Solving for Z, where Z = Operating Income
($4 x Z) - 10,000 = $6,000
($4 x Z) = $16,000
z = $16,000 / 4
z = 4,000
4,000 units
I'm going to stop here, because I'm not sure if you are still looking for help.
Hope that helps
-Matt