Myfoodz is a famous fresh ready-made meals business that operates in many suburbs in New South Wales. The selling price of a ready-made meal is $12. It is estimated that the company will incur a variable cost of $288,000 to make and deliver 32,000 meals (estimated production and sales). The company’s estimated fixed cost is $45,000.

Required

You are required to calculate the following. Show all calculations.

a) What is Myfoodz’s contribution margin ratio?

b) Calculate Myfoodz’s break-even point in units (meals). 

c) Calculate Myfoodz’s break-even point in sales dollars.

d) (i) What is Myfoodz’s margin of safety ratio? (Round off the answer to the nearest 2 decimal places).

(ii) How can managers of Myfoodz use this margin of safety ratio information to manage the profitability of the business?

e) How many meals must the company sell to earn a target profit of $90000?