PART III CVP ANALYSIS PROBLEM SOVING AND ANALYSIS. (30 Marks)

1. A store sells t-shirts. The average selling price is BD 15 and the average variable cost (cost price) is BD9. Thus, every time the store sells a shirt it has BD 6 remaining after it pays the manufacturer. This BD 6 is referred to as the unit contribution.

1. Suppose the fixed costs of operating the store (its operating expenses) are BD 100,000 per year. Find Break-even in units? (Marking scheme: Computation = 4, correctness of answer = 1; Total:5 Marks)
2. If the owner desired a profit of BD 25,000, what will be break-even point in BD? (Marking scheme: Computation = 4, correctness of answer = 1; Total:5 Marks)
3. If fixed costs rose to BD110,000, break-even in units volume would be? (Marking scheme: Computation = 4, correctness of answer = 1; Total:5 Marks)
4. If the average selling price rose to BD16, break even volume would fall? (Marking scheme: Computation = 4, correctness of answer = 1; Total:5 Marks)