Say production and sales is 20,000 units.

Each unit is sold at a mark-up rate of 150% (Cost plus 150% of cost)

Consider the following data

Variable Production cost per unit is $5 (D/M, D/L and V O/H)

Fixed production costs are $70,000

Selling and administration costs are $40,000 out of which 40% is fixed

The company applies the marginal / variable costing system

Required

A)Prepare a contribution profit and loss

B)Calculate the operating leverage

C)Assume an increase in sales next month by 10%, what will be the amount of profit?

D)What is the margin of safety in units?

Answer rating: 100% (QA)

Sure lets break down each requirement A Contribution Profit and Loss Statement Step 1 Calculate Sell... View the full answer