AMD Ltd manufactures a single product in a factory that is capable of producing 200,000 units per year. A budgeted Income Statement for the current year is shown below.

Sales (71,000 units)

Less Cost of Goods Manufactured:

Variable

Fixed

Gross Profit

Less Selling and administrative expenses:

Variable

Fixed

Net Profit Before Tax (NPBT)

$230,000

170,000

54,000

40,000 $710,000

-400,000

310,000

-94,000

$ 216,000

Required:

(a)Calculate the Contribution Margin per unit.

(b)Calculate the breakeven point in units and sales revenue.

(c)If the company wants to achieve a $300,000 Net Profit Before Tax (NPBT), how many units must be sold?

(d)Calculate the budgeted sales units and total revenue if management wants a $270,000 Net Profit After Tax (NPAT) (Tax at 25% of profit).

(e)The production manager has recommended an upgrade to existing Plant and Machinery at a cost of $1,000,000. This would decrease Variable Manufacturing Costs by $1 per unit and increase annual fixed costs by $154,000pa. What would be the new breakeven point in units?

(f)Calculate the sales units and total revenue required if the company is to make a Net Profit After Tax, that gives a return of 15% on Sales. Assuming the upgrade to existing Plant and Machinery is NOT undertaken.

(g)Reconstruct an Income Statement, proving (f) above is correct.