CVP, international cost structure differences. (10 minutes) Knitwear Ltd is considering three countries for the sole manufacturing site of its new sweater—Cyprus, Turkey and Ireland. All sweaters are to be sold to retail outlets in Ireland at EUR 32 per unit. These retail outlets add their own markup when selling to final customers. The three countries differ in their fixed costs and variable costs per sweater.

REQUIRED 1. Calculate the breakeven point of Knitwear Ltd in both

(a) units sold, and

(b) revenues for each of the three countries considered for manufacturing the sweaters.
2. If Knitwear Ltd sells 800,000 sweaters in 1998, what is the budgeted operating profit for each of the three countries considered for manufacturing the sweaters? Comment on the results.
8-17. CVP, income taxes. (10-15 minutes) Koninklijke BolsWessanen NV has fixed costs of Dfl 300,000 and a variable-cost percentage of 80%. The company earns net profit of Dfl 84,000 in 1998. The income tax rate is 40%.
REQUIRED Calculate (1) operating profit, (2) contribution margin, (3) total revenues and (4)
breakeven revenues.  lop1

Transcribed Image Text:

Cyprus Turkey Ireland VARIABLE ANNUAL FIXED COSTS EUR 6.5 million. 4.5 million 12.0 million VARIABLE MANUFACTURING COSTS PER SWEATER EUR 8.00 5.50 13.00 MARKETING AND DISTRIBUTION COSTS PER SWEATER EUR 11.00 11.50 9.00