Unique Designs Ltd produces a single product. The projected income statement for the coming year is as follows: Sales...

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Unique Designs Ltd produces a single product. The projected income statement for the coming year is as follows: Sales (25,000 units @ $25) Total Variable Costs Contribution Margin Total Fixed Costs Profit $ 625,000 $(350,000) $ 275,000 $(125,000) $ 150,000 Required: a. Compute the break-even point in units and sales dollars. [4 marks] b. Compute the new operating profit if sales are 20 per cent higher than expected. (Note: round to the nearest dollar). [4 marks] c. If the variable cost became $18 per unit, what would the new break- even amount be in units? (Note: round to the nearest unit and dollar) [4 marks] d. Explain what is meant by a margin of safety and what would this margin be if Unique Design Ltd sold 28,000 units per year? (Note: use your answer from Part c.) [4 marks] e. What does the term 'relevant range' mean. Give an example to support your answer (maximum of 200 words). [4 marks] [Total for Question 2 = 20 marks]

Answer rating: 100% (QA)

Let s go through each of your requirements step by step a Compute the break even point in units and sales dollars To calculate the break even point you can use the following formulas Break even Point View the full answer