Question 4 Cost Volume Profit Analysis (6 marks) Orange manufactures and sells mobile phones. They only...

Transcribed Image Text:

Question 4 Cost Volume Profit Analysis (6 marks) Orange manufactures and sells mobile phones. They only make one model of mobile phone called the "oPhone". Data relating to this product for 2021 is below: Selling price per unit $600 Variable manufacturing costs per unit $360 Variable marketing and distribution costs per unit $100 Fixed manufacturing costs per year $270,000 Fixed non-manufacturing costs per year $150,000 Required a) Explain the difference between fixed and variable costs using examples. b) Calculate the break-even point in units (phones). (2 marks) (2 marks) c) Calculate the margin of safety for 2021 if budgeted sales are 4,000 units (phones). (1 mark) d) How many units (phones) would Orange need to sell to earn a target profit of $280,000. *Students please remember to show all workings to maximise your mark. (1 mark) Question 4 Cost Volume Profit Analysis (6 marks) Orange manufactures and sells mobile phones. They only make one model of mobile phone called the "oPhone". Data relating to this product for 2021 is below: Selling price per unit $600 Variable manufacturing costs per unit $360 Variable marketing and distribution costs per unit $100 Fixed manufacturing costs per year $270,000 Fixed non-manufacturing costs per year $150,000 Required a) Explain the difference between fixed and variable costs using examples. b) Calculate the break-even point in units (phones). (2 marks) (2 marks) c) Calculate the margin of safety for 2021 if budgeted sales are 4,000 units (phones). (1 mark) d) How many units (phones) would Orange need to sell to earn a target profit of $280,000. *Students please remember to show all workings to maximise your mark. (1 mark)