Q2 M and N both 9

2 2 A firm makes wireless routers priced at 240 of which product Variable costs ore one-third of Sales revenues, in a small workshop with annual overheads of E1MN,000 (where MN are to be substituted by the last two non-zero digits of your Student ID. Hence, the value of the annual overheads are in the range E111,000 to 199,000 depending upon your personal details) a) Examine the workshop operating profitability: 1) Prepare a Contribution Statement for workshop production of 500 units: 1,000 units and 1.500 units using the format of Tat'e 02 (50%) ) Calculate the Break-even Point (using Overheads / Product Contribution) for the workshop - show your workings [10%) til) Calculate the Target Sales for a required Profit of 120,000 -- show your workings (10%) If the cost of parts/materials (from suppliers) increase such that the Product Contribution be reduced to half of Sales revenues: re-calculate the Break-even point and the Target Sales for the workshop and comment on the changes (30%) Contribution Statement Template Sales units. 500 1,000 1,500 Sales revenues Ennnn Ennnn Ennnn Less: Variable Cost Innnn (nnnn) Innnn Product Contribution fnnnn nnnn Less: Fixed Costs (nnnn (nnnn) nnnn (nnnn) Profit/Loss nnnn Table Q2