ABC Pty Ltd manufactures a single product in a factory that is capable of producing 80,000 units per year. A budgeted income statement for the current year is shown below:

  

Required:

1)  Calculate the contribution margin in total and per unit.

2)  Calculate the break-even point in units and sales revenue.

3)  If the company is to double its budgeted net profit, how many units must be sold?

4) The production manager has suggested a replacement machine costing $400,000 be purchased. This would increase fixed production costs by $50,000 per year, but would reduce variable production costs by $1.00 per unit. What would be the new break-even point in units?

5)  Calculate the sales required if the company is to make a net profit that gives a return of 12.5% on sales.

Transcribed Image Text:

Sales (72,000 units) $576,000 Less Cost of Goods Sold: Variable Fixed Gross Profit Less Selling & Administrative Expenses: Variable Fixed 94,000 Net Profit 162,000 160.000 54,000 40,000 322,000 254,000 160,000 Sales (72,000 units) $576,000 Less Cost of Goods Sold: Variable Fixed Gross Profit Less Selling & Administrative Expenses: Variable Fixed 94,000 Net Profit 162,000 160.000 54,000 40,000 322,000 254,000 160,000

Answer rating: 100% (QA)

Calculate the contribution margin in total and per unit Contribution Margin Sales Variable Cost 5760... View the full answer