Edward Food Processing Company is a wholesale distributor of biscuits in Holborn.

The Company has achieved steady growth over the past few years while Biscuit

prices have been on the increase. The Company is planning its budget for the next

financial year. Presented below are the data used to project the current year$$s aftertax income of $110,400.$

$$

Average Sales Price per Box $4\mathrm{.}00$

Average variable costs per Box

Cost of Biscuits $2\mathrm{.}00$

Profit on sale $0\mathrm{.}40$

Total $2\mathrm{.}40$

Annual fixed cost

Selling $160,000$

Administrative $280,000$

Total $440\mathrm{.}000$

Expected annual sales volume

$(390,000$ boxes$)1,560,000$

Tax rate $20\%$

Biscuit manufacturers have announced that they will increase prices of their

products by an average of $15\%$ in the coming year due to increase in material and

labour costs. Edward Food Processing expects same rates or levels as the current

year.

Required:

$($a$)$ Calculate Break$-$even point in boxes of biscuits for the current year.

$($b$)$ Calculate the Sales price per box that the company must charge to cover the

$15\%$ increase in the costs of biscuits and still maintain the current contribution

margin ratio.

$($c$)$ Determine the Volume of sales the company must achieve in the coming

year to maintain the same net income as projected for the current year

if the sales price of biscuits remains at $4$ per box and the cost of

biscuits increases by $15\%$