Woodpecker Ltd. produces and sells body boards. It has experienced steady growth over the last 10 years.
Fantastic news! We've Found the answer you've been seeking!
Question:
Woodpecker Ltd. produces and sells body boards. It has experienced steady growth over the last 10 years. However, a recent increase in market competition has led Tupac the manager, to believe there is a need for an aggressive campaign next year, 2022 to maintain the entity's present growth. The accountant has provided Tupac with the following data to prepare next year's campaign.
| Cost Schedules | ||
| Variable costs | Per Unit ($) | |
| Direct labour | 13.00 | |
| Direct materials | 8.00 | |
| Variable overhead | 4.00 | |
| Variable cost per Body Board | 25.00 | |
| Fixed costs | ||
| Manufacturing | $75,000 | |
| Selling | 65,000 | |
| Administrative | 60,000 | |
| $200,000 | ||
| Selling price per Body Board | $50.00 | |
| Expected sales, 2022 | $800,000 |
Required(show your working):
| |
| 2. What is the contribution margin per unit and ratio for 2022? | |
| 3.What is the break-even point in units and dollars for 2022? | |
| 4.How many units and dollars would have to be sold in 2022 to earn target profit of $126,000? | |
| 5.Calculate the margin of safety in units and dollars for 2022 |
Expert Answer:
To calculate the projected operating profit for 2022 we need to determine the total contribution margin and deduct the fixed costs from it Contributio... View the full answer
Posted Date:
