Question
The following information relates to Magnum pty ltd: Selling price per ice cream $195 Variable costs per ice cream Direct material $60 Direct Labour $15
The following information relates to Magnum pty ltd:
| Selling price per ice cream | $195 | ||||
| Variable costs per ice cream | |||||
| Direct material | $60 | ||||
| Direct Labour | $15 | ||||
| Manufacturing Overhead | $15 | ||||
| Selling costs | $10 | ||||
| Total variable costs per ice cream | $100 | ||||
| Annual fixed costs: | |||||
| Manufacturing Overhead | 350,000 | ||||
| Selling and Administrative | 150,000 | ||||
| Total Fixed costs | 500,000 | ||||
| Forecast annual sales (6500) | 1267500 | ||||
NB: As you can't manufacture part of a unit please round your answers up. 1. Break even point in units for Magnum 2. Break-even point in sales dollars for Magnum: 3. How many creams do Magnum have to sell in order to earn a profit of $165,000? 4. What is the firm's Safety Margin? 5. How many ice creams would Magnum have to sell in order to earn a profit of $165,000 after tax? Assume Magnum pays income tax of 30% 6.Management of Magnum estimates that the variable manufacturing overhead costs will increase by 10% next year. How many ice creams will the company have to sell next year to reach the break-even point?
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Statistics Informed Decisions Using Data
Authors: Michael Sullivan III
5th Edition
978-0134135373, 134133536, 134135377, 978-0134133539
