Tiara Corporation manufactures and sells scarfs. Price and cost data for the company are provided below:

Selling price per unit $50

Variable costs per unit

Manufacturing costs

Direct material 15

Direct labour 8

Variable manufacturing overhead 12

Variable selling and administrative costs 3

Annual fixed costs

Fixed manufacturing overhead $2,640,000

Fixed selling and administrative costs $1,560,000

Forecasted annual sales (units) 500,000

Required:

1. (a)What is Tiara Corporation's break-even point in dollars?
2. (b)How many units would Tiara Corporation have to sell in order to earn a before tax profit of $480,000?
3. (c)What is the company's margin of safety (in dollars)?
4. (d)If the company's direct material costs increase by 20 percent and the fixed selling andadministrative costs decrease by 20 percent, how many units will the company have to sell next year to reach its break-even point?
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