Question
Grand Ltd developed the following information for its product: Per Unit Sales price $80 Variable cost $ 53 Total fixed costs $1,450,000 Required: Answer the
Grand Ltd developed the following information for its product:
| Per Unit |
Sales price | $80 |
Variable cost | $ 53 |
Total fixed costs | $1,450,000 |
Required:
Answer the following independent questions and show computations using the contribution margin technique to support your answers.
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How many units must be sold to break-even? (2 marks)
[Answer and show workings here]
|
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What is the total sales dollars that must be generated for the company to earn a target profit of $60,000? (2 marks)
[Answer and show workings here]
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If the company is presently selling 75,000 units, but plans to spend an additional $135,000 on an advertising program, how many additional units must the company sell to earn the same profit it is now making? (2 marks)
[Answer and show workings here]
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Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $198,000. (4 marks)
[Answer and show workings here]
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