Question
PART A [13 Marks] ARG Inc manufactures and sells a single product. The following data have been extracted from the current year's budget: Sales
PART A [13 Marks] ARG Inc manufactures and sells a single product. The following data have been extracted from the current year's budget: Sales and production (units) Variable cost per unit Fixed cost per unit Contribution margin ratio 5,000 $50 $70 75% The selling price per unit for next year is to be 8% above the current year's budgeted figure, whereas both the variable cost per unit and the total fixed costs are forecast to increase by 12% above their budgeted level in the current year. The target for next year is that total profit should remain the same as that budgeted for the current year. Required: a) Calculate the CURRENT YEAR budgeted: i. Contribution per unit; ii. Total profit. iii. Breakeven point in units [2 marks] [3 marks] [2 marks] b) Calculate the number of units the company should produce and sell next year to achieve a target profit of $400,000. [6 marks]
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