Question
Lavender Ltd is a producer of hand sanitiser. It sells each bottle of hand sanitiser at $10 each. The cost of production is as follows:
Lavender Ltd is a producer of hand sanitiser. It sells each bottle of hand sanitiser at $10 each. The cost of production is as follows: Ingredients per bottle: $1.50 Empty container: $0.50 each Salesman commission: 10% of selling price. Factory overheads: $350,000 per month Required: a) Calculate the contribution margin per bottle produced and sold. (2 marks) b) Compute the break-even point in sales dollar value. (3 marks) c) If Lavender Ltd plan to make a targeted profit of $70,000 per month (ignore tax), how many bottles of hand sanitiser must be produced and sold? (3 marks) d) If Lavender Ltd currently produces and sells 80,000 bottles of hand sanitisers per month, how much profit (or loss) can it expect?
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