Question: Could someone answer for me this question. Thank you in advance. (d) If All-Star's direct labor costs increase by 5%, what, selling price must it
(d) If All-Star's direct labor costs increase by 5%, what, selling price must it charge to maintain the same contribution margin to sales ratio? No.4 Auto-parts Ple, markets a range of vehicle service packs. The company is planning to introduce as a new pack on to market a rear window, but is uncertain which alternative to use to promote sales of it. Auto-parts can either pay a commission on each sale or increase the salaries paid to sales staff. Data for the pack of the rear window is: Selling price -25 Variable cost per pack -14 Fixed cost of directly attributable to the rear window -85,056 The fixed costs included the salaries of the sales staff. Commission on each sale would be -1.40 per pack. Increase salaries to sales staff would cost an extra -14989. Budgeted sales for the year are 11,000 packs. Required: (a) Calculate the break-even point if commission is paid. (b) Calculate the break-even point if sales staff salaries is increase. (c) Calculate the margin of safety in units) for the two alternatives. Prepare a profit volume graph for choosing the pay a commission on each sale alternative. (d)
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