Question
ABC Company sells a product that has a price of GHC4.00 per unit, variable manufacturing costs of GHC2.00 per unit and selling cost of GHC0.50
ABC Company sells a product that has a price of GHC4.00 per unit, variable manufacturing costs of GHC2.00 per unit and selling cost of GHC0.50 per unit. ABC Company has a fixed manufacturing costs of GHC125,000 and fixed general, selling and administrative expenses of GHC25,000. Suppose ABC has the following questions for the management accountant: 1)How many units does ABC Company have to sell to breakeven? 2)How many units does ABC Company have to sell to earn an operating income of GHC100,000? 3)Suppose ABC expects to sell 150,000 units, what is the margin of safety? How do you explain your result? 4)What sales revenue must ABC Company achieve to breakeven? 5)What sales revenue must ABC Company achieve to earn an operating income of GHC100,000? 24
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