Mango Ltd produces several types of skin cream. You have been provided with thefollowing expected average weekly information for June.££Sales33,000Ingredients6,050Staff11,550Electricity3,100Factory rent3,600(24,300)Profit8,700The average skin cream sells for £6 per unit. All costs are variable costs exceptfor electricity costs which are semi-variable with a fixed element of £2,000 perweek and factory rent, which is fixed.In July, the average selling price per skin cream is expected to stay the sameas June, but the sales volume is expected to be 15% higher than June.Contribution in July is expected to be £2.40 per skin cream and fixed costs areexpected to total £5,700.In August, Mango Ltd considers selling some of the skin creams in smallerportions called mini-pots, in addition to the usual skin creams. It estimatesthat 1,200 mini-pots could be sold each week at £3 per mini-pot. The variablecost of each mini-pot would be£1.40. Incremental fixed costs per week would be £1,100. All other revenueand cost data for the existing skin creams is the same as in July.Poor weather conditions have led to a worldwide shortage of coconut oil whichis a key ingredient in all the skin creams. In November only 215,800 ml ofcoconut oil will be available. You have been given the following data forNovember:Skin CreamMini-potsPotsContribution per potCoconut oil required per unit (ml)£2.30£1.104022Fixed costs£5,600£1,200Maximum demand per week (units)4,9001,100Requirement(a) Calculate the number of pots of skin cream in JUNE that would need tobe sold to earn a profit of £11,000 per week.(b) Calculate the margin of safety percentage per week for JULY (to thenearest whole number).(c) Calculate the additional profit or loss that Mango Ltd would earn perweek from introducing the mini-pots in AUGUST.(d) Calculate the optimum number of pots of skin cream and mini- pots thatMango Ltd should produce in order to maximise contribution per week inNOVEMBER (round your answer to 2 decimal places)

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Mango Ltd produces several types of skin cream. You following expected average weekly information for Jun £ Sales 3 Ingredients 6,050 Staff 11,550 Electricity 3,100 Factory rent 3.600

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mango Ltd produces several types of skin cream. You have been provided with the following expected average weekly information for June. £ £ Sales 33,000 Ingredients 6,050 Staff 11,550 Electricity 3,100 Factory rent 3,600 (24,300) Profit 8,700 The average skin cream sells for £6 per unit. All costs are variable costs except for electricity costs which are semi-variable with a fixed element of £2,000 per week and factory rent, which is fixed. In July, the average selling price per skin cream is expected to stay the same as June, but the sales volume is expected to be 15% higher than June. Contribution in July is expected to be £2.40 per skin cream and fixed costs are expected to total £5,700. In August, Mango Ltd considers selling some of the skin creams in smaller portions called mini-pots, in addition to the usual skin creams. It estimates that 1,200 mini-pots could be sold each week at £3 per mini-pot. The variable cost of each mini-pot would be £1.40. Incremental fixed costs per week…
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