[Question 1]

A company makes a single product with a sales price of $10 and a marginal cost of $6. Fixed costs are $60 000 per annum.

Calculate:

(a)the number of units to break even

(b)Sales at break even point

(c)Contribution/Sales ratio

(d)What number of units will need to be sold to achieve a profit of $20 000 per annum

(e)What level of sales will achieve a profit of $20 000 per annum

(f)Because of increasing costs the marginal cost is expected to rise to $6.50 per unit and fixed costs to $70 000 per annum. If the selling price cannot be increased what will be the number of units required to maintain a profit of $20 000 p.a.

(g)If the taxation rate is 40% how many units will need to be sold to make a profit of $20 000 p.a.