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Question one: (6 marks) In 2020, the sales of an industrial company reached 10000 units. Each unit is sold at 35 JD. The production includes
Question one: (6 marks) In 2020, the sales of an industrial company reached 10000 units. Each unit is sold at 35 JD. The production includes Direct Materials 10 JD/ Unit; and 50000 JD as total Direct labor. At the same time, the per-unit share of depreciation costs was 5 JD/unit, 20 JD of total marketing costs, 5 JD of rental expenses, and 2JD of insurance costs. Using Excel, create the break-even point formula and find the following: 1) Find the break-even point 2) What is the profit (or loss) using present sales 3) If the company decides to lower the break- even point to 2000 units by reducing the fixed cost, calculate the new fixed cost needed for the company to accomplish that. 4) Using the change in Fixed cost resulted in question 3, calculate the change in price for the product to continue making the same profit it had as per question 2 before the change in fixed cost 5) Based on the question basic (original) information, If the company targets a profit of 200,000 JD for 2019, and the expected demand for that year is 10,000 units with the exact variable cost and Fixed cost, what is the best price should be for this new product? 6) Using the question main (original) information, the company is looking at these alternatives to increase the total profits next year: justify the best decision A) Reducing the variable cost by 25% B) Increasing unit price by 10%
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