Q1-

In the given scenario, a company that produces and sells widgets has Fixed Costs as follows:

• Rent: $3,000 per month
• Salaries: $4,000 per month
• Utilities: $400 per month
• Insurance: $400 per month

While variable costs per widget are:

• Cost of raw materials: $5 per widget
• Direct labor cost: $5 per widget
• Other variable costs: $7 per widget

The selling price per widget is $30.

Calculate the break-even point for the company in terms of the number of widgets it needs to sell to cover its costs and achieve a breakeven. Give a proper Interpretation for your answers.

Q2-

Ahmads Appliance Shop, a retail business in the appliance sector, wants to compare its financial ratios with the industry average as shown in table below. You are requested to:

1. Calculate the following financial ratios:
   1. Current ratio:
   2. Debt ratio:
   3. Quick ratio

for Ahmads Appliance Shop using the given data.

1. Assume that Ahmads Appliance Shop has current assets of $200,000 and current liabilities of $150,000.
2. Assume that Ahmads Appliance Shop has total debt of $300,000 and total assets of $600,000.
3. Assume that Ahmads Appliance Shop has current assets of $200,000, inventory of $80,000, and current liabilities of $150,000.

In the blow table, the first column lists the financial ratios being analyzed, the second column presents the calculated ratios for Ahmads Appliance Shop that you need to calculate from part one, the third column displays the corresponding industry averages, and the fourth column represents the variance between Ahmads Appliance Shop's ratios and the industry averages. This table allows for a clear visual comparison between the company's ratios and the industry benchmarks.

1. Use the below table to interpret the result of the financial ratios being analyzed.

Ratio	Ahmads Appliance Shop	Industry Average	Variance
Current Ratio	??	1.50	-0.17
Debt Ratio	??	40%	+10%
Quick Ratio	??	1.00	-0.20