Question 2

You are required to do a monthly cost-volume-profit analysis of the products sold by your organization. One of these products is called Get-It-Done. For November 2020, the company budgeted to produce 8,800 units of the product at a selling price of $800 each. The following cost information relating to the product was made available to you:

Cost per unit

Details	$
Direct labour	140
Direct materials	120
Variable production overheads	100
	360
Fixed production overheads	160
Total	520

Required:

(a) Determine the budgeted fixed cost associated with the production of Get-It-Done for November 2020. (2 marks)

(b) Calculate the break-even point in units and sales revenue. (4 marks)

(c) Express the break-even point as a percentage of the budgeted sales. (2 marks)

(d) Determine the margin of safety and explain the result that you get. (3 marks)

(e) Calculate the budgeted profit for November 2020. (3 marks)

(f) If the company wanted to make a profit of $3,696,000 what would the new selling price be? (3 marks)

(g) Prove your answer to part (f) above. (3 marks)