Question
QUESTION 3 Plastique Pty Ltd sells only one type of plastic container for multi-purpose packaging. Data relating to the product for 2019 are as follows:
QUESTION 3
Plastique Pty Ltd sells only one type of plastic container for multi-purpose packaging. Data relating to the product for 2019 are as follows:
| Number of Units sold | 45 000 |
| Selling Price per unit | $26 |
| Variable Manufacturing Cost per unit | $8 |
| Variable Selling Cost per unit | $4.50 |
| Annual Fixed Non-Manufacturing Cost | $80 000 |
| Annual Fixed Manufacturing Cost | $265 600 |
The CEO of Plastique currently is under pressure from the shareholders to increase profits to $432 000 in 2020.
- Calculate the Contribution Margin per unit for 2019.
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- Calculate the breakeven point in units and sales dollars for 2019.
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- Calculate the number of units that would have to be sold in order to reach the shareholders profit target of $432 000.
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- Prepare a contribution margin income statement, to calculate the new selling price per unit in 2020 required to reach the shareholders profit target. Assume that Plastique sells the same number of units as in 2019.
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| Required selling price =
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5. If annual fixed costs manufacturing costs increased by $60,000 and the company can choose to increase the price by 10% or decrease variable manufacturing cost per unit by 25% to compensate the decrease in profits. Which decision would maximise the profit of the company? Assume the number of units sold are 45 000.
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Puzzling Auditing Puzzles
Authors: Janice P. Russell
1st Edition
0873894782, 978-0873894784
