ABC Company produces and sells a single product. The selling per unit of the product is Birr 72 and the contribution margin ratio is 28% .The Company has budgeted to have annual fixed expenses of Birr 280,000.

 

Required:

Using the equation method determine the breakeven point in units.

Using the contribution margin method, determine the breakeven point in sales birr. 1millon

Determine and interpret the absolute and relative margin of safety assuming that the company is currently selling 16,000 units annually.

The company's management set an annual target before tax profit of Birr 56,000.Determine the number of units and the sales Birr that must be sold to achieve the planned target before tax profit.

The company's management set an annual target after tax profit of Birr 42,000 where the tax rate is 40%. Determine the number of units and the sales Birr that must be sold to achieve the planned after tax profit.