PROBLEM 3 (CVP Analysis & Incremental Analysis)25 MARKS

Part A 15 Marks

Intune Global is undergoing an analysis of one of the products it produces, the Applicator 2000. Each Applicator 2000 is sold for $40.

The following information on the product's total costs over the past five (5) months is provided below:

Required:

a)Using the High-Low method, calculate:

i.The Applicator 2000's variable cost per unit. 3 Marks

ii.The product's monthly fixed costs. 3 Marks

b)Based on your answer above, compute the product's contribution margin per unit and contribution margin ratio.3 Marks

c)If the company wants to earn a target income of $61,000 on this product, compute the level of sale dollars required.3 Marks

d)If the company achieves this level of sales (from part c), compute Intune's margin of safety in dollars with respect to the Applicator 2000.3 Marks