Self-test Musical Ltd produces gift boxes of three CDs with a birthday greeting card. These boxes sell at £20 per box. This product is in high demand and the company sales during 2010 totalled £1,200,000.

In 2010 the costs were as follows:

CDs and royalties cost (each) 9.00 Birthday card 0.30 Packaging (per box) 1.25 Direct labour (per box) 0.80 Variable overheads (per box) 0.65 Fixed overheads £96,000 Using the above information, answer the following questions:

1. Musical Ltd’s contribution per unit is:

(a) £8.00

(b) £12.00

(c) £14.00

(d) £20.00 2. Musical Ltd’s break-even point (in boxes) is:

(a) 4,800

(b) 8,000

(c) 12,000

(d) 32,000 3. Musical Ltd’s break-even point (in sales revenue) is:

(a) £48,000

(b) £160,000

(c) £240,000

(d) £640,000 4. How many boxes need to be sold to achieve a target profit of £l,000,000?

(a) 98,000

(b) 137,000

(c) 120,000

(d) 180,000 5. How many boxes need to be sold to achieve a target profit of £3,200,000?

(a) 1,600,000

(b) 209,800

(c) 160,000

(d) 412,000