Trying to solve my homework:

Show all your computations. Include currency signs, when applicable

1)Radiosounds Ltd makes a standard model of car radio, which it sells to car manufacturers for $120 each. Next year the business plans to make and sell 40,000 radios. The business's costs are as follows:

Manufacturing

Variable materials - $40 per radio

Variable labour - $28 per radio

Other variable costs - $24 per radio

Fixed cost - $160,000 per year

Administration and selling

Variable - $6 per radio

Fixed - $120,000 per year

Required:

a)Calculate the profit contribution. (5 marks)

b)Calculate the break-even output for next year, expressed both in quantity of radios and sales

value. (10 marks)

c)Due to the lower price of $100 per radio from a competitor for the same product, the CEO of Radiosounds Ltd. was advised by the Sales Department to lower the price of each radio to $90. If you were the CEO, will you follow this advice? Explain your answer. (5 marks)