Q1. Jassim Compagny is producing only one product. Two types of direct materials are used to produce this product: direct material type A and direct material type B.

The estimated data for Jassim Compagny is as following:

Sales $90,000

Costs:

Direct materials type A $40,000

Hourly employees 15,000

Managers salary 10,000

Direct materials type B 5,000

Marketing 10,000

Total Costs 80,000

Budgeted pretax profit $ 10,000

a. Compute the revenues needed to achieve a target after-tax income of $30,000. The income tax rate is 20%.

b. What is the margin of safety in revenue?

(Ch 3 Marks 4)