Tuning Ltd. budgets to sell 3 products and has provided you with the following selling prices and variable costs:

Product Sales (Units) Selling Price

per unit Variable Cost
per unit
Rs Rs
XDX 600,000 10 5
YCY 400,000 11 6
ZFZ 1,000,000 6 3

Annual fixed costs are budgeted at Rs4,000,000.
Required:
(a) Calculate the contribution / sales ratio for each product. 1 Mark
(b) Calculate the breakeven sales volume per product in total. 4 Marks
(c) How many units of each product and in total would Tuning Ltd need
to sell to earn a total profit of Rs6,000,000? 2 Marks
(d) Management are deciding whether or not to spend an extra
Rs400,000 on advertising and sales promotion of Product XDX. It is
considering reducing its selling price to Rs9 per unit, resulting in
expected sales of 800,000 units. Advise whether or not it is

financially worth while spending Rs400,000 on the advertising and
sales promotion.