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Sams Ltd is specialized in producing and selling washing machines. In 2018, the manufacturing cost per unit included: Direct material 125 Direct labor (20 minutes
Sams Ltd is specialized in producing and selling washing machines. In 2018, the manufacturing cost per unit included: Direct material 125 Direct labor (20 minutes per unit) 45/hour Variable manufacturing overhead 20 Variable selling expenses 15 Variable administrative expenses 10 Fixed costs for the year ended 31 December 2018 were: 000 Fixed manufacturing 1,100 Fixed selling and distribution 1,450 Fixed administrative 675 The company produced and sold 220,000 units at 225 per unit In 2019, management has decided to increase the selling price by 25% and to maintain the same contribution margin ratio as last year. This increase in price is to meet an increase of 1,450,000 in fixed costs in 2019. The company has produced and sold the same quantity in 2019 as last year. Required (a) Calculate the break-even point and margin of safety in both units and revenue for the two years, 2018 and 2019, and briefly comment upon the results
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