Shiloh Enterprises manufactures and sells gadgets. The business earned net income of

$$250,000$ in $2016,$ when sales was $6,000$ units and data for variable cost per unit and total fixed

costs were as follows:

Required:

a$)$ Compute the expected selling price per unit, using the equation method.

$(4$ marks$)$

b$)$ Calculate Shiloh's break$-$even point in units and in sales dollars.

$(2$ marks$)$

c$)$ Calculate the margin of safety in units and in sales dollars.

$(3$ marks$)$

d$)$ Given the sales of $6,000$ units, prepare a contribution margin income statement for the

year ended December $31,2016,$ detailing the components of total fixed costs and clearly

showing contribution and net income.

$(4$ marks$)$

e$)$ The management of Shiloh Enterprises profit objective for the period is to increase

operating income by $24\%$ in $2017.$ They expect per unit data and total fixed costs to

remain the same in $2017.$ Determine the number of units that must be sold to earn this

target operating profit. Is this a realistic goal?

$(4$ marks$)$

f$)$ Assume that as a result of reorganizing the production process, the management of

Shiloh Enterprises was able to reduce direct material cost per unit by $$2$ due to a change

in the supplier of the raw material used in the production process, but the sales units of

$6,000$ units is expected to decrease by $5\%,$ coupled with an increase in total fixed costs

of $$149,400.$ What must the new selling price per unit be if the company wishes to meet

the profit objective for $2017?$

$(6$ marks$)$

g$)$ Given the expected sales of $6,000$ units, graph Shiloh's CVP relationships clearly

showing the breakeven point, the sales revenue line, the fixed cost line, the total cost

line, the operating profit area, the operating loss area and the margin of safety in units

and sales dollars. $[$Use a scale of $2cm$ to represent $1,000$ units on the $x-$axis and $2cm$

to represent $$100,$ ooo on the $y-$axis$].$

$(7$ marks$)$