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X manufactures special sink units for fitting to camper vans. The selling price of a sink unit is $115, and variable costs per unit are
X manufactures special sink units for fitting to camper vans. The selling price of a sink unit is $115, and variable costs per unit are $45. X's directors have met to discuss sales plans for the financial year 2022. There is very stiff competition in this industry, and they feel that it will be difficult to match the sales performance of 3,200 units for the financial year just ended, 2021. Also, fixed costs have recently risen substantially because of the implementation of the new US law on special sinks. X expects to incur fixed costs of $210,000 in 2022, and the directors would like X to achieve a target profit of $140,000. X is also involved in providing other various goods and services. In the files submitted with this case there is some meeting notes, which includes the following statements made by members of X's management team: Sales Department Manager suggested that more units of a particular service could be sold if prices were lowered and, overall, this would result in increased profits.' Head of Budgeting Unit stated, 'A budget is a forecast of what is expected to happen in a business during the next year.' The management of X is asking you to use the relevant information provided to calculate the following: (i) Break-even point in units and in sales revenue for X. (ii) Margin of safety (in units) if X can sell 25% more units than in 2021. (iii) Number of units X must sell to achieve its target profit. (iv) If X is subject to US's corporate tax rate for the financial year beginning 1st April 2021, calculate X sales revenue to achieve its target profit after tax
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