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3.) Management is planning for an improvement in profitability for 2020, they would like to earn a total profit of $200,000 in 2020. However, it
3.) Management is planning for an improvement in profitability for 2020, they would like to earn a total profit of $200,000 in 2020. However, it is expected that due to rising materials costs in 2020, the cost of each unit produced will increase by $3. It is also expected that company salaries cost will be reduced by $75,000 in 2020. In light of these changes, if selling prices remain unchanged, how many units must be sold in order for LAMBTON LTD. to earn its desired profit level for 2020? (Hint, the profit break-even point) (6 marks) LAMBTON LTD. has prepared the following Contribution Format Statement of Income for 2019: LAMBTON COMPANY Statement of Income For the Year Ended December 31, 2019 Per Unit $ $ 12 20 Revenue Variable Costs Contribution Margin. Fixed Costs (includes depreciation of $80,000) Profit for the year Total $2,000,000 1,200,000 800,000 650,000 $ 150,000 Additional Information: Volume of output (production and sales) for 2019 was 100.000 units
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