Question
Hygienics Co produces free-standing sanitiser units for domestic and commercial use. They produce a single product in a highly competitive market. They have gathered the
Hygienics Co produces free-standing sanitiser units for domestic and commercial use. They produce a single product in a highly competitive market. They have gathered the following expected information for the year 2021:
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Selling price (per unit) Direct materials (per unit) Direct labour (per unit) | 155.00 60.25 30.50 |
Other costs are estimated for the year 2021 based on the expected sales of 62,000 units. These costs are given below:
Fixed Costs | Variable Costs | ||
Operating Costs | 420,000 | 1,750,000 | |
Marketing Costs | 350,000 | 122,500 | |
Storage Costs | 570,000 | 101,000 | |
Administration Costs | 232,000 | - |
For the year 2021, you are required to calculate:
- the expected profit or loss (5 marks)
- breakeven point in units and sales revenue (5 marks)
- margin of safety in units and % change (5 marks)
- the profit/loss if the selling price is increased by 5% and sales quantity decreases by 50% (5 marks)
- the revised break-even point in units for (d) (5 marks)
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