Bonza Ltd Sales & Cost Analysis

This assignment involves interpreting sales and cost data for Bonza Ltd over a 12-month period. The company aims to boost selling units by 10,000, with current sales being 6,000. By implementing new strategies, they achieved an increase of 33% in net income (400,000), generating revenue through selling 10,000 units at $120 and 14,000 units at the previous rate of $130. The variable cost of manufacturing and selling remains unchanged ($50 and $30 respectively). This analysis can help Bonza Ltd make better investment decisions for future expansion.

ACCOUNTING FOR
MANAGERS

Table of Contents
INTRODUCTION...........................................................................................................................1
Question 1........................................................................................................................................1
1.1 if the increase in price and additional investment were made...............................................1
1.2 The improved quality of product could increase the sales volume.......................................1
1.3 promotion champagne by rebating all drills sold in 3 months..............................................2

INTRODUCTION
Accounting for managers helps the professional heads of the organisation in making a
good business decision. There can be implementation of various proposals or plans which can be
helpful in improving the sales and profit of the entity (Salas and Campos, 2016). This can be
fruitful for the firm in securing optimum amount of reserves for the future. Bonza manufacturing
Ltd is adopting new changes with the help of its various managerial teams of several departments
with the innovative ideas.
Question 1
Financial and other data of last 12 months for popular power drill for the home renovator
manufactured by Bonza Handtools ltd. The directors of this organisation wants to rise the
profitability of this product with this three suggestions.
1.1 if the increase in price and additional investment were made
Jan rossi the accountant of the Bonza Handtools ltd has increased the prices on selling is
10$ per unit and believes that it will rise the profitability. And made additional expenses about
promotion of product through advertisements was of $125000.
Particulars units Price/unit Amount
Sales 20000 $140 2800000
Variable cost of manufacturing 20000 $50 1000000
Fixed manufacturing cost 400000
Total production 4200000
Variable sales and administrative cost/unit 20000 $30 600000
Fixes selling and administrative cost/unit 300000
Advertisement costs 125000
Total sales and administration 1025000
Total cost 5225000
Net Income (sales- total cost) 375000
Interpretation: It is to be interpreted that if the selling price is been increased to $10 per unit of
Bonza Ltd (Renz, 2016). And also increasing the promotional expenses by $125000 as to secure
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the demand of the product in market. The organisation has earned $375000 of profit which has
rise of $75000.
1.2 The improved quality of product could increase the sales volume
Tome Tune, the production manger of Bonza ltd. Decided to increase the sales volume by
25% that can be by improving product quality (Collier, 2016). Made additional advertisement
investment for $50000 aimed at tradespeople and home renovator's sales increment. Adding $5
unit at the variable cost which can increase the quality of product.
Particulars Units Price/unit Amount
Sales 25000 130 3250000
Variable cost of manufacturing 25000 55 1375000
Fixed manufacturing costs 400000
Total production cost 1775000
Variable selling and administrative cost per
unit 25000 30 750000
fixed selling and manufacturing costs per unit 300000
Advertisement costs 50000
Total sales and administration 1100000
Total cost 2875000
Net Income (sales- total cost) 375000
Interpretation: The production manager of Bonza ltd has proposed to increase the sales by 25%
at the same selling price of $130, the company would not be able to increase the profitability
(Collier, 2015). The profit of the organisation is equal to the proposal made by Jan rossi the
accountant of firm. While increasing the variable production cost per unit and expanding the
advertisement costs helps in increasing the profit by $75000.
1.3 promotion champagne by rebating all drills sold in 3 months
Mary Watson, the sales manager at Bonza Ltd undertake the administration of promoting
the product where e offered $10 rebate on all drills to be sold in tree months and for the rest of
the period it will be same as before (Renz, 2016). The management believes that it will be a
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boost in selling 10000 units, only 6000 units were sold within that period. The advertisement
campaign was expected to be $40000 which is going to be launched in later march.
Particulars Units Price/unit
Amou
nt Units
Price/
unit
Amou
nt
Total
amount
Sales 10000 120
120000
0 14000 130
182000
0 3020000
Variable cost of
manufacturing 10000 50 500000 14000 50 700000 1200000
Fixed manufacturing costs 400000
Total production cost 1600000
Variable selling and
administrative cost per unit 10000 30 300000 14000 30 420000 720000
fixed selling and
administrative costs per unit 300000
Total sales and
administration 1020000
Total cost 2620000
Net Income (sales- total
cost) 400000
Interpretation: It is to be interpreted that the sales manager has planned to boost up the selling
units of the product about 10000. Bonza ltd usually sales 6000 in between that period. The
techniques helped the organisation In gaining 33% more net income as compare with the
previous 2 plans that is 400000. it is an favourable indication for the entity and they can be able
to make better advertisement investments. For the 3 months the company sold 10000 units at 120
which amounted at 120000, and for the remaining months 14000 units were sold at the previous
rate of 130 which brings amount of 1820000. The rate of variable cost of manufacturing and the
variable selling and administrative cost per unit remains unchanged which are 50 and 30
respectively for all 12 months (Webster, 2016). This plan can be beneficial for the firm as it
generates more capital and can be helpful in gathering good amount or revenue, so the
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organisation could make more fruitful investments in coming year as to expand the production,
new promotional techniques etc.
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