Chelonia Ltd Manufactures Small Robot Toys

question 8

Multiple Choice

Chelonia Ltd manufactures small robot toys. It plans to introduce two products, Speedie and Spunkie. It is anticipated that the product mix will be 40% Speedie and 60% Spunkie. One unit of Speedie will be sold for $100, with variable cost equals $40. For a unit of Spunkie, the selling price will be $120 and the variable cost is $70. The fixed cost for producing the two products is $108 000. The company plans to include a safety margin of $20 000 before tax. Assuming a tax rate of 30%, what should be the budgeted sales?

• A) Speedie: 1012 units; Spunkie: 1517 units
• B) Speedie: 1517 units, Spunkie: 1012 units
• C) Speedie: 948 units; Spunkie: 1422 units
• D) Speedie: 1422 units, Spunkie: 948 units

---

Definitions:

Gross Profit

Gross profit is the difference between revenue and the cost of goods sold (COGS), representing the profit a company makes after deducting the costs directly associated with producing its goods or services.

Cost of Goods Sold

An accounting term for the direct costs attributable to the production of the goods sold by a company.

Service Business

A type of business that primarily offers intangible goods or services to consumers, such as consulting, legal advice, and maintenance services.

Merchandising Business

A type of business that makes profit by buying goods at a wholesale price and selling them at a retail price, primarily dealing in goods rather than services.