Question 1 [10 marks]

The following relates to a concern for a particular period sales = 10,000 units at $ 40 each

Variable cost $ 20 per unit

Fixed cost = 100,000

1. Calculate below;

a) PV Ratio

b) Break even sales

c) Margin of safety

2. Calculate below:

a) the new PV Ratio

b) new Break even sales

c) Margin of safety

d) Sales to earn the same amount of profit that the concern had been earning earlier after reducing the selling price by 10 %

e) Number of units to be sold to get a profit of$ 60,000 at reduced price