The following information pertains to UWC Company, from Vancouver, BC, and its product "Magic Gimmick"

Selling price per unit of "Magic Gimmick": $45.00

Direct material cost per kg: $2.00

Direct labour cost per unit: $1.20

Variable overhead cost per unit: $0.80

Material required per unit: 2kg

Other variable expenses per unit: $0.60

Annual fixed costs:

Advertising: $15,000

Fixed manufacturing: $60,000

Other fixed expenses: $8,000

You are a newly minted MBA and your boss knows that you are able to answer his questions.

Therefore, he asks you for a formal memo which he plans to use with various stakeholders (i.e. senior mgmt., banks, etc.) in which you answer his 3/three questions:

1. What is the break even point in both units and sales dollars?

2. Assume UWC Company has a target net profit of $240,000 and a tax rate of 40%. What is the break even point in both units and sales dollars?

explain in detailed steps with theory