Question 2: Cost-Volume-Profit Analysis (Solver and/or Goalseeking) The Rich Coffee Company is a single product firm which manufactures and markets granulated coffee in large containers exclusively for commercial use. The company uses a standard cost system and a flexible budget for factory overhead and both have proved to be highly accurate over the past 12 months. The company has manufacturing capacity of 140,000 units per annum. Details relating to the past 12 months: Sales (80,000 Units) $3,200,000 Less Cost of Goods Sold 2,260,000 Gross Profit 940,000 Less Operating Expenses 620,000 Operating Profit before tax 320,000 Less Tax at 30% 96,000 Operating Profit after tax $224,000 An analysis of manufacturing, selling and administration costs has revealed that: Variable Operating Expenses amount to $4.00 per unit. Fixed Manufacturing / Product costs amount to $500,000 per annum. Required: (Consider each part independently of all other parts, with each part referring to the original data). Using manual procedures and/or Goalseek and / or Solver, generate solutions to the following scenarios. Consider each part independently of all other parts, with each part referring to the original data.) Unless otherwise stated use the original data in the question. Required: Calculate the Contribution Margin per unit Calculate the Contribution Margin Ratio (4 decimal points) What is the breakeven point in Units for the company? Using a selling price of $36 per unit, calculate the sales quantity required to earn an Operating profit before tax of $280,000. Calculate the price per unit necessary to achieve an after-tax profit of 12% on total revenue (based on a sales volume of 70,000 units). 014 Calculate the sales volume necessary to achieve an after-tax profit of 8% on the sum of total cost of sales and operating expenses based on a selling price of $43 per unit. 015 Using a sales quantity of 75,000 units and using a selling price of $42.00, what is the reduction in variable costs necessary to earn an after-tax profit equal to 13% of Sales Revenue? 016 A sales enquiry is received from an overseas firm. What would be the minimum price at which coffee could be sold to the overseas firm assuming total domestic sales of 70,000 units per annum at a price of $42 per unit. The Rich Coffee company requires a after tax return of 10% on total revenue. The export order is for 15,000 cans. Using manual procedures and for Goal Seeking and / or Solver, generate solutions to the following scenarios. 09 Q10 Q11 012 013