1. Taylor Pty Ltd provides you with the following information in relation to budget predictions for the coming year for its new product: (6 marks)

Estimated sales units for the year	12,500 units
Selling price per unit	$160
Variable product cost per unit	$60
Sales commission paid per unit	$12
Total fixed costs for the year	$726,000

Required (show your calculations):

1. Calculate the breakeven point in units.

2. Calculate the expected profit from the estimated sales.

3. Calculate the expected sales dollars needed to make a profit of $506,000

4. Fixed costs have increased by $28,000 and variable costs have increased by $4 per unit. Management has decided to maintain the selling price at its current value. By how many units will sales volume have to increase from the current estimated sales projection to achieve the same profit of $506,000?

CVP analysis appears to be a great tool. It is, however based on several assumptions. Identify and briefly explain two assumptions.