117 marks) product: Lexie Enterprises Ltd. has estimated the following costs for producing 20.000 $ 10.00 S Current production and sales in units Selling price per unit Total costs: Direct materials Direct labor Variable overhead Variable selling and administrative expenses Fixed overhead Fixed selling and administrative expenses $ $ S $ $ 80,000 100,000 30,000 60.000 240,025 180,000 a) Calculate the following: (1 mark each = 5 marks total) Total fixed costs Total variable costs Variable cost per unit b) Assume the the company would like an after tax profit of $150.000 and is wat 40%. (2 marks) Desired profit after taxes (desired net income) Tax rate $ A Calculate the following: (1 mark each) Desired before-tax profit (desired operating income) Units to sell to produce a profit of $150,000 after taxes c) Refer to the original data. 17 marts) The company is trying to improve profit and is considering two options 30 31 Option 1. Increase selling price by $1.00. Assume there is no change to how variable costs or fixed costs. Only selling price per unit changes from the 32 33 OR Option 2. Refer back to original data (this is independent of Option 1). Increase the number of units sold by 5% by spending $10,000 on an advertising campaign. There is no change to see price and variable cost per unit, use the original data for these, only sales quantity and red costs change from the original data. 4 5. 38 Option 1: Increase selling price by How much is the contribution margin per unit if the selling price 39 is increased (1 mark) What will operating income be if this option is selected? (1 mark) $1.00 e Option 2: Increase sales volume by Amount spent on advertising campaign $ 5% 10,000 How many units are sold at this new sales level? (1 mark) How much are fixed costs in total if this option is selected? (1 mark) What will operating income be if this option is selected (1 mark)? d) Assume the company had a margin of safety last year of 10,000 units and the safety is 8,000 units. Which margin of safety would the company preters who safety mean (what does 8,000 units margin of safety mean)? Explain in a way that non could understand? (3 marks) 4 Margin of safety (in units) - last year 10,000 5 Margin of safety (in units) - this year 8.000 3 5 More preferable margin of safety for company? (1 mark) - Explanation (2 marks)