Tartan Company is a single-product entity and provides the summary data shown below relating to its product for 2020.

Required

(a) Calculate the contribution margin per unit.

(b) Calculate the contribution margin ratio.

(c) Calculate the break-even in units and sales dollars for 2020.

(d) Calculate the profit earned in 2020.

(e) Tartan Company is considering changes in plant operations and the production process for 2021.
The changes would result in a reduction in variable costs per unit of $6 and an increase in fixed manufacturing costs of $132500. How many units would need to be sold to earn the same profit as in 2020? Would you recommend the changes?

(f) Prepare the statement of profit or loss for (d) and (e) above.

Transcribed Image Text:

Selling price per unit Variable manufacturing costs Annual fixed manufacturing costs Variable marketing, distribution and administration costs costs Annual fixed non-manufacturing Annual volume $ 50 24 250 000 8 128 000 24 000 units