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(b) The marginal costing operating statement of AAT Limited for the year just ended is as follows:

$ Sales (5,000 units at $4 per unit) 20,000

Variable costs (direct materials, direct labour, etc.) 8,000

Contribution 12,000

Fixed cost 7,500

Profit 4,500

Required:

(a) Calculate the break-even point.

(b) Calculate the margin of safety.

(c) The sales level to achieve a target profit of $22,500.

(d) The selling price to be charged to earn a profit of $22,500 on sales of 10,000 units.

(e) The additional sales volume required to meet $5,700 additional fixed promotion expenses to maintain the original profit.