Jona Smartbox Ltd is a wholesale distributor of smart box for packing fruits, vegetables and other perishable goods in Wollongong, Australia. The following information relates to the next years operation forecast. Selling price $6 per box Variable production costs $1.20 per box Expected annual sales 50,000 boxes Fixed production costs $2 per box Variable selling costs $0.40 per box Fixed administration $45,000 Fixed selling costs $35,000 The industry has announced that there will be an upward selling price adjustment of 20% in the coming year mainly due to the increase in input costs and wages.

Required: (a) Compute the coming years contribution for a smart box. (1.5 marks)

(b) Compute the profit before tax for next year. (2 marks)

(c) What is the break-even point in boxes for next year? (1.5 marks)

(d) Suppose the tax rate for next year is 40%, how many boxes does Jona Smartbox Ltd need to sell to achieve profit after tax of $60,000? (3 marks)

(e) If the company revised its selling price upwards by 20% following the practice of the other industry players due to the increase in variable production costs increased by15% next year. How many boxes do Jona Smartbox Ltd need to sell in order to maintain the profit that the company planned to earn in part (b) above? (4 marks)

(f) Explain any four (4) assumptions that Jona Smartbox Ltd would have to make in order for the above cost volume profit analysis to be valid. (200-300 words) (8 marks)

* Keep to full decimal places for all the steps before the final answer and 2 decimal places for final answer where applicable.