Question

. Assume that the CDE Company has yearly Fixed costs of $30,000 and its Variable costs...

. Assume that the CDE Company has yearly Fixed costs of $30,000 and its Variable costs are $30,000, which are 60% of its Sales. Calculate:

[Use ONLY formula for your calculations. Do NOT use algebra]

Question:

  1. Its profit or loss when its total sales are $110,000.

     b. The sales level (dollars) required to break-even.

     c. The sales needed to make a profit of $35,000.

2. ABC Company manufactures and distributes Product A. An extract from the 20X5 statement of financial performance is as follows:

Sales (200,000 units)

$7,000,000

Variable cost of sales

$2,500,000

Fixed factory overhead

$1,500,000

Variable selling and distribution costs

$1,000,000

Fixed selling and administration costs

$800,000

--------------

Operating Profit

$1,200,000

--------------

Required (show all workings):

a. Calculate the manufacturing contribution margin.

b. Calculate the contribution margin per unit.

c. Calculate the break-even volume (in units) for ABC Company.

d. Calculate the new Operating Profit at a sales volume of 250,000 units, assuming no change in selling price or cost structure. [ie. there is idle capacity]

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