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Step 3: Profit decisions are important to the Martins. These decisions not only arise from understanding the market, pricing policies and margins the managers need to understand the tools and elements they need to consider as they target either profit levels or their ability to manage the elements of the profit calculation. For example, if CompuTech is operating at a loss or below BREAK EVEN then understanding how they might be able to manage costs, or volumes to generate profits becomes very important. BREAKEVEN analysis can help the Martins and CompuTech decide on any of the following: how many units they need to sell, what price should they sell at (and compared to what the market will bear), what levels their fixed costs are at, what product or service should a company promote more or less. Assuming the following: (i) the sales price for each CompuTech product sold is $50; (ii) each product sold costs $25 in Raw Material components; and the business Fixed Cost is as determined in your Dec 31st, 2021 Income Statement. Q1: What is the BE in units for CompuTech in 2021? 04: If CompuTech were to hire a Sheridan student (annual cost for Part Time service $20,000 per year) to help in the marketing of CompuTech, what would the impact be on the company's BE? Q5: of the Sheridan student could impact unit sales by 20% growth, would their hiring be justified? Explain Q6 With the following information for 2022 prepare a pro-forma Income Statement for the year ending December 31, 2022, and then calculate CompuTech's (a) income before taves. (b) contribution margin and (c) PV ratio. RM Purchases $205,000 Freight in 4,000 Sales Salaries: 60,000 Commissions: 3,000 3,000 Travel: Advertising 5,000 Admin Salaries 38,000 420,000 Revenue: Depreciation: Office leasing 40,000 7,000 14,000 Finance Costs: O SPRE Advertising: 5,000 Admin Salaries: 38,000 Revenue: 420,000 Depreciation: 40,000 Office leasing: 7,000 Finance Costs: 14,000 Income Taxes: 13,000 Q7: Assuming that the price per unit and the variable cost per unit have stayed the same as in calculations for 2021, what is the new BE in units for CompuTech in 2022? How does this compare to the BE in units for the previous year? Step 3: Profit decisions are important to the Martins. These decisions not only arise from understanding the market, pricing policies and margins the managers need to understand the tools and elements they need to consider as they target either profit levels or their ability to manage the elements of the profit calculation. For example, if CompuTech is operating at a loss or below BREAK EVEN then understanding how they might be able to manage costs, or volumes to generate profits becomes very important. BREAKEVEN analysis can help the Martins and CompuTech decide on any of the following: how many units they need to sell, what price should they sell at (and compared to what the market will bear), what levels their fixed costs are at, what product or service should a company promote more or less. Assuming the following: (i) the sales price for each CompuTech product sold is $50; (ii) each product sold costs $25 in Raw Material components; and the business Fixed Cost is as determined in your Dec 31st, 2021 Income Statement. Q1: What is the BE in units for CompuTech in 2021? 04: If CompuTech were to hire a Sheridan student (annual cost for Part Time service $20,000 per year) to help in the marketing of CompuTech, what would the impact be on the company's BE? Q5: of the Sheridan student could impact unit sales by 20% growth, would their hiring be justified? Explain Q6 With the following information for 2022 prepare a pro-forma Income Statement for the year ending December 31, 2022, and then calculate CompuTech's (a) income before taves. (b) contribution margin and (c) PV ratio. RM Purchases $205,000 Freight in 4,000 Sales Salaries: 60,000 Commissions: 3,000 3,000 Travel: Advertising 5,000 Admin Salaries 38,000 420,000 Revenue: Depreciation: Office leasing 40,000 7,000 14,000 Finance Costs: O SPRE Advertising: 5,000 Admin Salaries: 38,000 Revenue: 420,000 Depreciation: 40,000 Office leasing: 7,000 Finance Costs: 14,000 Income Taxes: 13,000 Q7: Assuming that the price per unit and the variable cost per unit have stayed the same as in calculations for 2021, what is the new BE in units for CompuTech in 2022? How does this compare to the BE in units for the previous year
