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QU #2 Carico has the capacity to manufacture 50,000 units annually of its only product. The following information is available: Selling price - Variable manufacturing
QU #2 Carico has the capacity to manufacture 50,000 units annually of its only product. The following information is available: Selling price - Variable manufacturing costs Fixed manufacturing costs$180,000 annually Fixed marketing and administrative costs Variable marketing and administrative costs S26 per unit per unit $120,000 annually per unit Required a) Calculate breakeven point in units. (5 marks) b)Compute the quantity of units which need to be sold to earn a target annual profit of $120,0000 5 marks) c) In an attempt to achieve better results in the marketplace, management has been looking at changing the reward system for marketing, distribution and sales personnel an increase in variable marketing and administrative costs by $2 per unit, and would reduce fixed marketing and distribution costs by $50,000 i)Calculate the number of units required to breakeven if management implemented the changes(5 marks) ii) Would you suggest that management pursue the changes? Explain(5 marks) d) Cost volume profit analysis is more relevant to small enterprises than it is to large enterprises. Discuss this statement CLEARLY stating whether you agree or disagree and why.(5 Marks) . This would result in
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