Dee and Co. is a small manufacturing Company which has prepared the following monthly budgeted figures for a typical month: Production Volume 18,000 units Selling Price per Unit GH8.50 Sales GH153,000 Total Variable Costs GH63,000 Total Fixed Costs GH40,000 Profit GH50,000

Required

: i) What is the contribution per unit? (2 marks)

ii) Determine the contribution to sales ratio. (2 marks)

iii) What is the number of units and value that Dee and Co. needs to produce and sell each month in order to break even? (2 marks)

iv) Find the sales revenue in value required to make a target profit of GH80,000. (2 marks)

v) The managers are thinking of installing a new machine which will increase fixed costs by GH 8,000 per month, but will reduce variable costs by 10%. If production remains at 18,000 units per month, what will be the profit if this is implemented, and what will be the new breakeven point in value? (2 marks)

vi) In applying the Cost-Volume-Profit (CVP) analysis for short term decision purposes, certain assumptions are relevant. Enumerate at least five (5) of such assumptions.