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Question 5: Iron Manufactures decorative iron railings makes several assumptions when it comes to preparing for next year's operations. The management has developed a number

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Question 5: Iron Manufactures decorative iron railings makes several assumptions when it comes to preparing for next year's operations. The management has developed a number of estimates which include sales price, fixed cost, and variable cost per unit. Running theit analysis involves using severation equations to figure out the best sales voloum option for them. The assumptions the company made are: Total Per Unit Sales (20,000 units) $ 1,000,000 $50 Direct Materials $ 200,000 $ 10 Direct Labor (variable) $ 50,000 $ 2.50 Manufacturing Overhead: Variable $ 70,000 $ 3.50 Fixed $ 80,000 $ 4 Selling & Administrative: Variable $ 100,000 $ 5 Fixed $ 30,000 $ 1.50 For the business to be profitable, the contribution margine must exceed total fixed costs. Determine whetere the contribution margin of the company exceeds its total fixt cost (2 Marks). If yes, determine what is the appropriate break-even point (in both dollars and units) for the company. (2 Marks) Evaluate what will the revenue earned by the company be after they pay all their fixed and variable costs associated with the production (2 Marks). If the company is targeting a net operating income of $660,500, what will the best degree of net operating leverage be? (2 Marks)

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