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please explain this question 12 Student (4).pdf 16, 18 Question 3: C-V-P analysis Charlton Ltd, operating at full capacity, sold 80 000 units at a
please explain this question
12 Student (4).pdf 16, 18 Question 3: C-V-P analysis Charlton Ltd, operating at full capacity, sold 80 000 units at a price of $124 per unit during 2016. The income statement for 2016 is as follows: Sales $9,920,000 Cost of goods sold 5,000,000 Gross profit $4,920,000 Expenses: Selling expenses $2,600,000 Administrative expenses 1,220,000 Total expenses Income from operations before tax 100,000 The division of costs between fixed and variable is as follows: Fixed 25% Cost of goods sold Selling expenses Administrative expenses Variable 75% 80% 50% 40% 50% Management is considering a plant expansion program that will permit an increase of $2,480,000 in yearly sales. The expansion will increase fixed costs by $272,000, but will not affect the relationship between sales and variable costs. Required: show all your workings. a) Calculate the unit contribution margin. (3 marks) b) Calculate the break even sales (in units and dollars) for 2016. (4 marks) a) Calculate the break even sales in units under the proposed program (2 marks)Step by Step Solution
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