Question
The EP Storage Locker Market Report is exclusive and talks in detail about the current market situations. Also, about the overall market journey in the
The EP Storage Locker Market Report is exclusive and talks in detail about the current market situations. Also, about the overall market journey in the previous five years along with predictions made by experts in the industry. However, the report also provides the necessary SWOT analysis as it is one of the main elements. In revenue terms, in the worldwide market, the EP Storage Locker Market is forecast to generate a great market share.
Your client, Lock Swift Pty Ltd is worried about their locker business in the future and has asked you to help them analyse the situation. Lock Swift Pty Ltd operates a single-product entity.
Data relating to the product for 2020 is as follows:
Volume sold | 20,000 |
Selling price | $13.75 |
Variable costs: |
|
Variable Direct materials | $1.85 |
Variable Direct labour | $3.15 |
Variable factory overhead | $2.65 |
Variable marketing expense | $0.60 |
Fixed costs |
|
Fixed manufacturing cost | $55,713 |
Administrative cost (all fixed) | $24,175 |
Assessment Tasks:
Answer all 6 questions below:
1. Calculate the contribution margin per unit. (4 Marks)
2. Calculate the break-even in both dollars and units for 2020. (5 Marks)
3. Calculate the margin of safety in both units and sales dollars. (5 Marks)
4. Calculate the profit achieved in 2020 given the annual volume of 20 000 units. (5 Marks)
5. How many units must be sold for Lock Swift Pty Ltd to earn operating income of $40,590?
(4 Marks)
6. How will you explain the limitations of the CVP? Despite having many limitations, why do accountants use CVP analysis?
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