=+4-38 KKK CVP analysis, income taxes (CMA, adapted) OBJECTIVES 1, 2, 3, 4 R. A. Ro & Company Pty Ltd, a manufacturer of quality handmade timber bowls, has had a steady growth in sales for the past five years. However, increased competition has led Mr Ro, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company’s present growth. To prepare for next year’s marketing campaign, the company’s management accountant has prepared and presented Mr Ro with the following data for the current year, 2014:

Variable cost (per bowl)

Direct materials $3.25 Direct manufacturing labour 8.00 Variable overhead (manufacturing, marketing, distribution and customer service) 2.50 Total variable cost per bowl $13.75 Fixed costs Manufacturing $25 000 Marketing, distribution and customer service 110 000 Total fixed costs $135 000