PART C

Sunshine Company sells sun umbrellas at a beach resort in the Maldives. Data concerning the company's cost, revenue and volume for the month of June 2019 are provided below:

Selling Price	$30
Variable Expenses: Product cost Sales commission (shop staff)	$14 $4
Fixed Expenses	$160,000 per month
Unit Sales	50,000 units

Required:

a. Calculate the break-even point (BEP) in units and sales dollars (4 marks).

b. Calculate and interpret the Contribution Margin ratio (4 marks).

c. Prepare a cost-volume-profit graph for the company for the month of June (4 marks).

d. What is the net income/loss for June 2019 (3 marks)?

e. In the following month, Sunshine Company is considering paying the shop manager an incentive of $1 per umbrella sold in addition to the break-even-point. This is expected to increase the unit sales by 20 percent. What will be the net income/loss of Sunshine Company if this change is made? Should this change be made (5 marks)?