Question
Clark's manufactures comfortable women footwear to be worn during office hours. The financial information related to the company is provided below: Selling price per unit
Clark's manufactures comfortable women footwear to be worn during office hours. The financial information related to the company is provided below: Selling price per unit = $20 Variable cost of production = $6 per unit Fixed cost for the year = $10,000 No of units to be sold next year = 1,000 pairs Income taxes = 20% a) Calculate the breakeven point in units. (1) b) Calculate the breakeven point in dollars. (1) c) How many units must the company sell to reach a target net profit of $16,000? (2) d) Compute the margin of safety in both dollar and percentage terms. (2) e) Compute the degree of operating leverage. (2) f) If sales (units) increase by 20% in the following year, how much g) would net income increase? (2)
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