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3.0 Tokio Ltd manufactures and sells only one product. The product is sold at $10 per unit. Other details are as follows: Variable cost
3.0 Tokio Ltd manufactures and sells only one product. The product is sold at $10 per unit. Other details are as follows: Variable cost per unit $5 Fixed cost per month $20 000 Normal sales per month 6 000 units Required: a) Calculate the contribution per unit. b) Calculate the contribution ratio (P/V ratio). c) Calculate the break-even point in units. d) Calculate the break-even point in sales value ($). e) Calculate the margin of safety and the margin of safety ratio. f) Draw a break-even graph which clearly indicates the break-even point. g) Calculate the net profit per month if 5 000 units are sold. h) Suppose the variable cost increases to $6 per unit and the fixed cost decreases to $18 000. i. Calculate how many more units have to be sold in order to break-even. Calculate the number of units to be sold in order to earn a net profit of N$7 500 per month. Page 8
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