Acompany manufactures a single product. Budget and standard cost details for next year include:

Required:

(a) Calculate the break-even point in units.

(b) Calculate the percentage by which the budgeted sales can fall before the company begins to make a loss.
The marketing manager has suggested that the selling price per unit can be increased to $25.00 if the sales commission is increased to 8 per cent of selling price and a further $10 000 is spent on advertising.
These changes will cause the break-even point (to the nearest whole number) to be:

(c) Calculate the revised break-even point based on the marketing manager’s suggestion.
(5 marks)
CIMA P1 Performance Operations

Transcribed Image Text:

Selling price per unit Variable production cost per unit Fixed production costs Fixed selling and distribution costs Sales commission Sales $24.00 $8.60 $650 000 $230 400 5% of selling price 90 000 units