Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying a promotional discount of 20% to its product and incurring an additional fixed cost of R250 000, unit

Accounting
27th Edition
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Chapter21: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 21.17EX
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Question 4
Palladium (Pty) Ltd has given you the following information relating to normal (budgeted)
information and its expected promotional information:
Normal Data
Weekly sales (units)
Normal variable cost per unit
Contribution margin %
Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying a
promotional discount of 20% to its product and incurring an additional fixed cost of R250 000, unit
150 000
R0,30
80%
sales will be 2 and a half times higher than normal sales. Normal variable cost per unit is expected
to remain the same for the promotional period. The promotional period is expected to last six (6)
weeks.
Q.4.2
Calculate the unit sales multiplier needed during the promotion to break even.
Transcribed Image Text:Question 4 Palladium (Pty) Ltd has given you the following information relating to normal (budgeted) information and its expected promotional information: Normal Data Weekly sales (units) Normal variable cost per unit Contribution margin % Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying a promotional discount of 20% to its product and incurring an additional fixed cost of R250 000, unit 150 000 R0,30 80% sales will be 2 and a half times higher than normal sales. Normal variable cost per unit is expected to remain the same for the promotional period. The promotional period is expected to last six (6) weeks. Q.4.2 Calculate the unit sales multiplier needed during the promotion to break even.
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