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Oman Beta company sells 5,000 T-shirts in UAE. Salespersons are paid basic salary plus a decent commission of $14 on each sale made by them.

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Oman Beta company sells 5,000 T-shirts in UAE. Salespersons are paid basic salary plus a decent commission of $14 on each sale made by them. Selling price and other expenses data is given below: Selling price per t-shirt $80 Variable cost per t-shirt Direct Cost per unit $36 Sales commission 14 50 Total Fixed cost per year Rent Marketing Salaries $19,200 36,000 16.800 72,000 Required: a) Compute contribution margin per unit and as ratio. (1 mark) b) Compute the breakeven point in units and in dollars. (1 mark) c) Compute margin of safety in dollars. (1 mark) d) Calculate the breakeven point if the manager is paid an extra commission of $6 per t-shirt. (1 mark) e) What will be the effect of change on net operating income or loss of Beta Company if 23,500 t-shirts were sold and fixed cost increased to $100,000? (1 mark)

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