A company makes a single product with a sales price of £12 and a variable cost of £9. Fixed costs are £120,000 per month. The Company budget to sell 90,000 units of the product a month.Calculatenumber of units to break evensales at break-even pointc/s ratioWhat the budgeted profit per monthWhat number of units will need to be sold to achieve a profit of £20,000 p.a?What level of sales will achieve a profit of £20,000 p.a?If the taxation rate is 40% how many units will need to be sold to make a profit after tax is £20,000 p.a.?Because of increasing costs the marginal cost is expected to fall to £6.50 per unit and fixed costs to £70,000 p.a. If the selling price cannot be increased what will be the number of units required to maintain a profit of £20,000 p.a.? (ignore tax)

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Answered: A company makes a single product with a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....

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A company makes a single product with a sales price of £12 and a variable cost of £9. Fixed costs are £120,000 per month. The Company budget to sell 90,000 units of the product a month.

Calculate

number of units to break even
sales at break-even point
c/s ratio
What the budgeted profit per month
What number of units will need to be sold to achieve a profit of £20,000 p.a?
What level of sales will achieve a profit of £20,000 p.a?
If the taxation rate is 40% how many units will need to be sold to make a profit after tax is £20,000 p.a.?
Because of increasing costs the marginal cost is expected to fall to £6.50 per unit and fixed costs to £70,000 p.a.
If the selling price cannot be increased what will be the number of units required to maintain a profit of £20,000 p.a.? (ignore tax)

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