Section 3: Cost-volume-profit analysis (15 marks each * 2 = TOTAL: 30 MARKS) 1. Wormy Comp is a manufacturer of plastic worm farms. Data relating to their one product for 2020 is as follows: Annual volume Selling price per unit Variable manufacturing cost per unit Annual fixed manufacturing costs Variable marketing and distribution costs per unit Annual fixed non-manufacturing costs 18,000 $560 $230 $2,800,000 S45 $1,800,000 2. Safety First is a manufacturer of life jackets, life vests and buoyancy aids. They have provided the following information relating to the sales of their products in 2020: Required: Life Vests A. Calculate the break-even units for 2020. [3 marks] Sales mix (8,500 units) Selling price Variable cost/unit Life Jackets 2.000 $120 $45 2,600 $110 $30 Buoyancy aids 3,900 $85 $25 Total Fixed costs = 5515,000 Required: B Calculate the margin of safety in units. [2 marks] A. Calculate the break-even point in total units and units per product for 2020, using the following table: [5 marks) Life Jackets Life Vests Buoyancy Aids Total Unit sales Contribution margin Sales mix % Weighted Average Contribution Margin Calculate the profit achieved in 2020 given the annual volume of 18,000 units. [3 marks] B. Calculate the total profit for 2020. Show all your workings. [2 marks] D Covid-19 has increased the prices of plastic. This increased the variable manufacturing cost to $250 per unit. However, the company has managed to reduce their factory rental by $100,000, which has saved money on fixed manufacturing costs. Calculate the units that would need to be sold in 2021 to achieve the same profit as 2020. Comment on the impact of Covid-19 on the costs for 2020 using the relevant figures you calculated above. [7 marks] Page 7 of 10 Page 8 of 10