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This is the picture of the entire problem abe x x Aa 1 Normale 1 Nessuna ... Titolo 1 Carattere Paragrafo The Brooks company manufactures
This is the picture of the entire problem
abe x x Aa 1 Normale 1 Nessuna ... Titolo 1 Carattere Paragrafo The Brooks company manufactures smart furniture including tables You have been provided with the information below for the smart table production line. Starting inventory Nill Wood 35 per unit Other materials 2 per unit Material handling 20 000 estimated costs per year Direct labour 20 per unit Line supervisor 40 000 estimated costs per year Line equipment depreciation 30 000 estimated costs per year Share of factory rent 50 000 estimated costs per year Shipping (to customers) costs per unit Sales commissions 6 per unit Share of General & administrative expenses 60 000 estimated costs per year Share of Marketing & sales expenses | 50 000 estimated costs per year Sales price 1 10 per unit Assignment: You are required to: a Calculate profit assuming sales units are 9000. (1 marks) b. Compute the contribution margin per unit in $ and contribution margin ratio. (2 marks) c. Calculate the break-even point in both units and sales in euros, (2 marks) d. At above sales, calculate the margin of safety in units and $ and the safety index in %. (3 marks) e. i) Calculate the operating leverage. ii) What % change in sales is required to double your profit? (2 marks) f. Assume that sales increase by 19 800 euros next year (more units sold - no change to unit selling price). If cost behaviour patterns remain unchanged, by how much will the net income increase? (1 marks) g. Refer to original data. Assume that management wants the company to earn a minimum profit of 255 000 euros. How many units would have to be sold to meet this target? (1 marks) h. The company is contemplating the use of quality inspection. This will increase variable costs per unit by 2 euros, but will reduce G&A expenses by 15 000 euros. i) Calculate the level of sales (in number of products sold) that would generate same profit under both (without or with the change) plans. (1 marks) ii) What is the operating profit at that level of salesStep by Step Solution
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