Wormy Comp is a manufacturer of plastic worm farms. Data relating to their one product for 2020 is as follows: Annual volume 18,000 Selling price per unit $560 Variable manufacturing cost per unit $230 Annual fixed manufacturing costs $2,800,000 Variable marketing and distribution costs per unit $45 Annual fixed non-manufacturing costs $1,800,000 Required: A. Calculate the break-even units for 2020. [3 marks] ____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ B. Calculate the margin of safety in units. [2 marks] ____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ C. Calculate the profit achieved in 2020 given the annual volume of 18,000 units. [3 marks] ____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ D. Covid-19 has increased the prices of plastic. This increased the variable manufacturing cost to $250 per unit. However, the company has managed to reduce their factory rental by $100,000, which has saved money on fixed manufacturing costs. Calculate the units that would need to be sold in 2021 to achieve the same profit as 2020. Comment on the impact of Covid-19 on the costs for 2020 using the relevant figures you calculated above. [7 marks] ____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________ _____________________________________________________________________

Annual volume Selling price per unit Variable manufacturing cost per unite Annual fixed manufacturing costs Variable marketing and distribution costs per unite Annual fixed non-manufacturing costs 18,000 $5604 $2304 $2,800,000 $454 $1,800,000+