1-Salem Industries sells products A, B and C. In 2019 the quantity sold, sales revenue, total variable costs products were:

Products

A

B

C

Quantity

10,000

6,000

14,000

Sales Revenue

500,000

675,000

1,120,000

Variable cost

400,000

405,000

742,000

Fixed costs were $224,400.

Required:

1.Compute Salem's breakeven sales (units). Prove your answer.

2.Calculate the sales (in units) required to earn a target profit $149,600. Prove your answer.

3.Calculate the reduction needed in the fixed costs to break even at 6,000 units; in case the selling price increased by 10% and the variable cost decreased by 5% for the three products.

[Marks: 10+10+10=30]

2-Rani Industries wants to launch a new product in the market. The company expects 18% margin on selling price. The current market price of the similar product is $250. The production cost of this product currently comes around $220 per unit.

Required: Calculate the reduction required in cost to meet the target cost per unit

[Marks: 5]

3-PLC Industries has developed a new product with a full cost of $630. The company desires a 25% mark up on selling price.

Required: If the company adopts cost plus pricing method for the selling prices, calculate the mark up and the selling price.