Question 1 Cost Volume Profit

Treats is a producer of soft candy.

The financial details for each box are as follows:

	$
Sales Price	5.60
Sugar	0.35
Natural flavours	1.85
Other ingredients	1.04
Packaging material	0.76
Sales commission	0.20

The fixed manufacturing overhead cost for candy production is $32,300 per year

The fixed Selling and Administration costs are $12,500 per year.

Required

1. Calculate how many boxes of candy Treats must sell in a year to breakeven.
2. Calculate the amount of sales revenue that Treats would earn at breakeven point.
3. Calculate the amount of profit the business will make if it sold 35,000 boxes of candy.
4. If Candy land wants to make a profit after tax of $18,200 after tax, how many boxes of candy does it need to sell?
5. Treats is considering raising the selling price per box of candy to $6.20 but anticipates that this will cause the volume of sales to drop. Assuming that Treats is only able to sell 31,500 boxes if the price per box is increased to $6.20 calculate the net profit it could expect to earn.