Question 2: (30 Marks) Two companies Holly and Eden manufacture two similar products. The following data...

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Question 2: (30 Marks) Two companies Holly and Eden manufacture two similar products. The following data for the two companies for the year 2021 are provided below: Company Sales Revenue ($) Total Cost ($) Variable Costs 60,000 42,000 40% of sales revenue 80,000 48,000 50% Holly Eden Required: 1- Calculate the Break Even Point (BEP) in dollars of product for each company. (6 Marks) 2- Calculate the percentage margin of safety for each company. (6 Marks) 3- If sales of the product in Eden company are equal to 4,000 units, determine the BEP (in units), and present the Break-even chart. (7 marks) 4-In 2021, company Eden plans to increase the variable cost by $2 while the fixed cost and the selling price will remain constant. Calculate the number of units to be sold in order to earn the same profit as Holly in 2021. (6 Marks) 5- Based on your answers to parts 1 and 2, Discuss which company has a safer financial position, and why. (5 Marks) Question 2: (30 Marks) Two companies Holly and Eden manufacture two similar products. The following data for the two companies for the year 2021 are provided below: Company Sales Revenue ($) Total Cost ($) Variable Costs 60,000 42,000 40% of sales revenue 80,000 48,000 50% Holly Eden Required: 1- Calculate the Break Even Point (BEP) in dollars of product for each company. (6 Marks) 2- Calculate the percentage margin of safety for each company. (6 Marks) 3- If sales of the product in Eden company are equal to 4,000 units, determine the BEP (in units), and present the Break-even chart. (7 marks) 4-In 2021, company Eden plans to increase the variable cost by $2 while the fixed cost and the selling price will remain constant. Calculate the number of units to be sold in order to earn the same profit as Holly in 2021. (6 Marks) 5- Based on your answers to parts 1 and 2, Discuss which company has a safer financial position, and why. (5 Marks)

Answer rating: 100% (QA)

ANSWER Break Even Point of Holly Company 30000 Break Even Point of Eden Company 16000 Margin Of Safety of Holly Company 05 or 50 Margin Of Safety of E... View the full answer