Question

. 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]

Answer 1