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Question 4. Cost volume prot analysis (15 marks) Multi-Make Ltd manufactures self-assemble radio kits.Each unit sells for $8, and the business has a relevant range
Question 4. Cost volume prot analysis (15 marks) Multi-Make Ltd manufactures self-assemble radio kits.Each unit sells for $8, and the business has a relevant range of production between 30 000 and 60 000 units per year. The budget for the coming year is as follows: Sales (50,000 units) $400,000 Less variable costs Manufacturing Direct Material Direct Labour $87,500 $57,500 Variable Overhead Total Manufacturing Marketing Advertising salaries Total Variable cost $50,000 $195,000 $105,000 $300,000 Contribution Margin Less Fixed costs Manufacturing Marketing Total Fixed Cost Prot before tax $ 45,000 $ 27,000 $ 72,000 $28,000 Required: a) The company wishes to know what sales are required to achieve a prot before tax of $45,000? (5 Marks) b) The rm also wants to know what sales are necessary to provide a prot of 10% on sales ? (5 Marks) c) Explain and describe the meaning of outcome a and b
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