Part B: Total 11 Marks (3 for a, 4 marks each for b and c)

Company name: Armidale Comfort Games (ACG)

Year under consideration: 2021

Nature of business: Assembles and markets Childrens Online Game Players (COGPs)

Selling Price per unit: $1000 each.

Variable Cost per unit: $500

Total Fixed Costs: $12,500 per month for assembling; and, a separate total of selling and admin expenses of $25000.

Additional costs: ACG pays a commission on sale to its Sales and Marketing staff members @ 10 percent of sales.

Required: Based on the information provided, work out the following for ACG for the year 2021

a. The contribution margin per COGP.

b. The break even (BE) sales point (in number of COGP)?

c. For ACGs target pretax profit (operating profit) of $75000, the number of COGPs ACG need to sell during the year?

Hint: For b and c (separately), denote the required number of units by a letter (say, A, B or C).