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Question a and b, please QUESTION 1 ABC Ltd., a maker of light switches, has experienced a steady growth in sales for the past three
Question a and b, please
QUESTION 1 ABC Ltd., a maker of light switches, has experienced a steady growth in sales for the past three years. The company's management accountant has prepared the following data for the current year, 2021: Variable cost: Direct labour 12 per light switch Direct materials 5 per light switch Variable overhead 3 per light switch Total variable costs 20 per light switch Fixed costs: Manufacturing 50,000 Selling 30,000 Administrative 80,000 Total fixed costs 160,000 Selling price 30 per light switch Expected sales, 2021 (30,000 light switches) 900,000 Tax rate: 10% REQUIRED: Please note: a maximum word count applies to some parts of this question. (a) Using the information provided above: (i) Calculate the projected after-tax profit for 2021. (5 marks) (ii) Calculate the after-tax break-even point in units and sales revenue for 2021. (4 marks) (b) ABC Ltd. has set the sales target for 2022 at a level of 1,200,000 (or 40,000 light switches). To attain this target, the company plans to spend an additional selling expense of 50,000 for advertising, with all other costs and tax rate remaining constant. (i) Calculate the after-tax profit for 2022Step by Step Solution
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