Scarcity Enterprise makes three products, AL, BE and OM. The following information was provided in order to do a cost, volume, profit analysis.

ALBEOM

$$$

Selling price180270240

Less Variable Expenses:

Direct materials247232

Other variable expenses10290148

Total variable expenses126162180

Demand (units)500500500

Total fixed cost$721,500

Required:

I.Advise management on the amount of each product to manufacture to break-even.Show all workings.[11 marks]

II.Calculate the amount of each product to manufacture to make a profit of $111,000 before tax.Show all workings.[6 marks]

III.List three assumptions of CVP[3 marks]

IV.Explain the term margin of safety and state three ways in which it can be expressed.

[4 marks]