Question

Grange manufacturing company had net income of $300,000 in 2017 when the selling price per unit was $200 and data for variable and fixed costs were as follows:  

Cost Schedule:

Variable Costs:

Direct Material $28 Direct Labour $35

Variable Manufacturing Overhead $17

Total $80

Fixed Costs:

Manufacturing Overhead $225,000

Advertising 45,000

Administrative 150,000

Total $420,000

Required:

Using the sales units calculated in (i), Construct a breakeven chart for Grange Manufacturing company, clearly showing the breakeven point and the margin of safety in units and dollars and the region representing profits and losses. ( use a scale of 2cm to represent 1,000 units on the x-axis and 2cm to represent 200,000 on the y-axis)

Answer 1