Timbertop Ltd is a manufacturer of timber outdoor chairs. Timbertop makes only one type of timber

outdoor chair. The data relating to 2016 is given below:

Selling price per unit $69

Variable manufacturing costs per unit $38

Variable marketing costs per unit $13

Annual fixed manufacturing costs $150,000

Annual fixed non-manufacturing costs $93,000

Required

a) Explain the difference between fixed and variable costs using examples.

b) Calculate the contribution margin per unit and contribution margin ratio.

c) Calculate the break-even point in units and in dollars

d) How many units would Timbertop need to sell to earn a target profit of $90,000?

e) If the variable marketing costs per unit increase by $2 and fixed manufacturing costs decrease to

$143,000, how many units would Timbertop need to sell to earn a target profit of $90,000?