3. Target Contribution Breakeven The WeRNuts manufacturing company sells their "Model B for $5.00 per unit. Their variable cost per unit is $4.25. The loved costs total $750,000. If WeRNuts plans to increase advertising by $80,000 and also plans a profit goal of $70,000, how many units must be produced and sold to achieve these goals? (3.5 Marks) 4. Income or Operating Statements (simple format) (6 Marks) a) Unit sales of 10,000 b) Unt selling price $40 c) Unit variable cost $20 d) Marketing expenses S40,000 e) Fixed expenses (administration, rent, etc) $100,000 $ Sales Cost of goods 4/6 Profit 5. Davis Company has fixed costs of $200,000 and is product sells for $250, the variable cost per unit is $200. Sales for this company in 2010 are forecast to be $1,250,000 (3 Marks) f) How many units do they plan to sell? g) What is the breakeven volume (units? ) h) If the achieve the sales forecast units that you calculated in a, what is the expected profit? 6. International Conventions overhead costs to produce the 3 day Marketing Conference is $90,000 and their advertising costs are $50,000. They estimate that the variable costs for each attendee including meals and materials are $350. They are charging a registration price per attendee of $1,500 (3 Marks) 1) What are the break even number of attendees? If the target return is $50,000, what are the contribution target break even numbers of attendees? *) If the international Conventions raised their prices per attendee to $2000 what would their new break even attendance be? 7. Zinc Energy Co has launched a new battery that uses new zinc-air technology. The unit costs for the batter are: battery housing of $8 materials S6 and direct labour $6 per unit Retooling of the factory will add a one time additional foed cost of $ 1 million in equipmnmet. Annual fixed costs include sales, marketing and advertising expenses of $1 milion general and admin expenses of $ 1 milion and other fixed costs totaling $2 miliona Marks) a. What is the total variable cost associated with the new battery? b. What are the total fixed costs of the new battery? c. If the price is set at $35 for the new battery what would the break even point be in units? In $ sales? 8. Prepare an Income Statement - label each line of the Income statement including the numbers you calculate (6 Marks) Sell 2000 units SP = $80 per unit Cost of Goods = $60 per unit Fixed Administrative costs = $ 20,000 Marketing Expenses $5000 5 Sales Profit 6/6