INSTRUCTION: Read the questions carefully and use the information provided in each question to answer that question.

Show all your calculation and workings.

QUESTION 1

ABC Company has the following data for the month of May 2021:

Unit Sales Price	OMR 40
Total Variable Costs	OMR 60,000
Fixed Costs	OMR 18,550
Units sold	3,455 units

Requirements:

1. Prepare a CVP income statement for ABC. Provide (a) per unit values and (b) total

2. What is the contribution margin ratio?

3. What is the break-even point in dollars?

4. What is the margin of safety ratio?

5. If the company wishes to increase its total dollar contribution margin by 45% in 2021, by how much the net income will, change if all other factors remain constant?

6. Assume that management set the sales target for the year 2022 at a level of OMR 142,200 (3,550 units sold). ABCs management believes that to attain the sales target in 2022, the company must incur an additional fixed expense of 2,500 for advertising in 2022, with all other costs remaining constant. What will be the break-even point in sales dollars for 2022 if the company spends the additional OMR 2,500 on costs?

7. Calculate the break even point in units and sales if variable cost per unit increased by 15%.