Question
Vine Pty Ltd produces and sells bottles of wine. Price and cost data are in the following table. Selling price per bottle $ 37.50 Variable
Vine Pty Ltd produces and sells bottles of wine. Price and cost data are in the following table. Selling price per bottle $ 37.50 Variable costs per bottle: Direct material $ 12.30 Direct labour 6.00 Manufacturing overhead 9.00 Selling costs 2.40 Total variable costs per bottle $ 29.70 Annual fixed costs: Manufacturing overhead $ 432 000 Selling and administrative 621 000 Total fixed costs $1 053 000 Forecast annual sales (140 000 units) $5 250 000 (In the following requirements, ignore income taxes.) Required: 1. What is Vine's break-even point in units? 2. What is the company's break-even point in sales dollars? 3. How many units would Vine have to sell in order to earn a profit of $570 000? 4. What is the firm's safety margin? 5. Management estimates that direct labour costs will increase by 10 per cent next year. How many units will the company have to sell next year to reach its break-even point? 6. If Vine's direct labour costs do increase by 10 per cent, what selling price per unit must it charge to maintain the same contribution margin ratio
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started