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Question 4 Tuscan Trading sells sporting equipment. You are provided with the following information in relation to budget predictions for the coming year. Estimated sales
Question 4 Tuscan Trading sells sporting equipment. You are provided with the following information in relation to budget predictions for the coming year. Estimated sales units for the year 25,000 Selling price per unit $40 Variable cost per unit $16 Total fixed costs for the year $361,900 In addition to the above, Tuscan pays $2 sales commission to the sales staff for each unit sold. Required: (i) Calculate the contribution margin per unit Calculation area: Contribution margin (ii) Calculate the breakeven point in sales dollars Calculation area: Breakeven point QUESTION 4 continued... (iii) Calculate the profit from the estimated level of sales. Calculation area: Profit (iv) Calculate the expected sales dollars needed to make a profit of $198,000. Calculation area: Sales dollars (v) Fixed Costs have increased by $31,400 and Variable Costs are to increase to $18 per unit. Management has decided to maintain the selling price at its current value and continue with the current commission structure. How many units will need to be sold to achieve a profit of $198.000? Calculation area: Units
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