a) COST - VOLUME - PROFIT ANALYSIS

Protest Industries produces only one product. The following revenues and cost have been estimated for the forthcoming month:

Selling price, $ 117 per unit (SP)

Variable cost, $ 78 per unit (VC)

Fixed Cost, $ 78,000

The managers of the firm wish to know the following:

1. Calculate contribution margin per unit
2. Calculate contribution margin ratio.
3. BEP in units and Dollars
4. Calculate margin of safety if actual sales are 6,000 units
5. Arrange a Break-even chart using above information
6. Calculate how many units must be sold to get a profit of $156,000.

(b) Make or buy Decision

Consider the following scenarios for Decision Making:

1. Sparks Ltd produces three products: A, B and C. The following is an estimate of costs and revenue for the forthcoming year:

\fDirect materials Direct Labour 13 Variable manufacturing overhead 9 Fixed manufacturing overhead 10 Total 39