Patterson Pte Ltd manufactures mini table for the children. The selling price is $25 per unit, and the variable cost is $15 per table. The following information is related to the company's estimated for the coming year results.

Sales (30,000 units) 750,000

Less: variable costs (450,000)

Contribution 300,000

Less: fixed costs 210,000

Net profit 90,000

Required:

a. Calculate the break-even point in units.

b. Calculate the contribution margin

c. Calculate the contribution margin (CM) ratio.

d. Calculate the break-even point in total sales values using the CM ratio.

e. Calculate the degree of operating leverage.

f. Calculate the number of units it needs to sell to achieve the targeted profit of $250,000?

g. Calculate the margin of safety in percentage.

h. Because of the increase in material cost, the variable costs of the company increase by $3 per unit next year. Selling price per unit remains constant at $25. Calculate the new CM ratio and the break-even point in units.

Answer rating: 100% (QA)

To solve these questions we need to use the following formulas Contribution Sales Variable Costs Contribution Margin CM Contribution Sales 100 Breakev... View the full answer