One of the industrial companies produces product (E), and sells a unit of it at a price of 60 riyals, and the cost of producing and selling the unit is the following: direct materials 15 riyals, direct wages 9 riyals, indirect industrial variable costs 6 riyals, marketing costs 12 riyals. The total fixed costs of the company are 900,000 riyals, distributed between industrial, marketing and administrative activities at rates of 50%, 30% and 20% respectively.

Required:

A- Calculating the break-even point in units and value.

B- Calculating the margin of safety ratio if the planned sales are 55,000 units with a comment on the result and suggesting what it deems appropriate.

C- If the selling price increased by 25%, variable costs increased by 20%, fixed industrial costs increased by 10%, and fixed marketing costs rose to an amount of 300,000 riyals, which affected the break-even point with the interpretation of the result.

D- Calculating the number of units to be sold to achieve a 25% safety margin (using the original data).

E- If the company wants to make a profit of 20% of sales, calculate the value of sales that achieve the company's goal (using the original data).

To get the result, use the accounting rule:

-Unit Breakeven Point = Total Fixed Costs / Unit Contribution Margin

-Breakeven point in value = Breakeven point in units * Sale price -Break-even Point = Total Fixed Costs / Unit Contribution Margin Ratio

Contribution Margin = Sales Revenue - Variable Costs

Sales revenue = (number of units * sale price)

Variable costs = (number of units * variable cost per unit)

Gross Contribution Margin = Sales Revenue (Number of Units * Unit Sales Price) - Unit Variable Costs (Number of Units * Variable Cost per Unit)

Total Contribution Margin = Number of Units * (Sales Price per Unit - Variable Cost per Unit)

Unit Contribution Margin = Unit Sales Price - Unit variable cost

Unit Contribution Margin = Total Contribution Margin Number of Units

Contribution margin ratio = gross contribution margin sales revenue

Contribution Margin Ratio = Unit Contribution Margin Unit Sale Price