Crestwood Ltd makes 200 wooden kitchen chairs every month and sells them for €50 each. Fixed monthly overheads are €3,000 and the standard cost of one chair is as follows:

Required

1. Calculate the variable cost per month for one chair.
2. Calculate breakeven point.
3. What is the operating income if 200 chairs are sold in one month?
4. Calculate the number of chairs that need to be sold to give a target operating income of €4,000.
In an attempt to boost sales, Crestwood Ltd plans to decrease the selling price to €48, increasing rawmaterial  costs by 20% by using higher-quality materials, and increase its advertising expenses by €1,000 a  month. Calculate

5. Calculate the new breakeven point.
6. What is the operating income if 350 chairs are sold?
7. Compute the margin of safety (% of sales) if 350 chairs are sold.
8. How many chairs will need to be sold to give an operating income of €4,000?

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Materials Direct labor Variable overheads €15 € 8 € 7