QUESTION 4 Cost Volume Profit Analysis 25 MARKS Evergrow Ltd makes and sells a range of three water pumps, A, B, and C for backyard gardens. Budgeted data for the year are: Product Sales volume (units) Selling price per unit Direct costs per unit: Materials Labour Royalties Production Overheads A 25,000 (b) [10 marks] $ 260 46.2 25.65 4 point. [5 marks] 75 B 15,000 $ 210 53.4 30.73 6 96 C 10,000 $ 160 36.5 24.35 5 Production overheads are absorbed on a machine hour basis, at a rate of $60 per machine hour. 30% of the overheads are estimated to be fixed. 40 A total of 65,000 machine hours are available for the next year. Required: Based on the budgeted sales mix, compute the (a) Weighted average contribution to sales ratio. [7 marks] The breakeven sales ($). (c) The number of units of each water pump that will be sold at the breakeven (d) The margin of safety expressed as a % of budgeted sales revenue [3 marks]

QUESTION 4-Cost Volume Profit Analysis 25 MARKS Evergrow Ltd makes and sells a range of three water pumps, A, B, and C for backyard gardens. Budgeted data for the year are: Production overheads are absorbed on a machine hour basis, at a rate of $60 per machine hour. 30% of the overheads are estimated to be fixed. A total of 65,000 machine hours are available for the next year. Required: Based on the budgeted sales mix, compute the (a) Weighted average contribution to sales ratio. [7 marks] (b) The breakeven sales (\$). [10 marks] (c) The number of units of each water pump that will be sold at the breakeven point. [5 marks] (d) The margin of safety expressed as a \% of budgeted sales revenue [3 marks]