XYZ company produces lucrative toys for kids. The following data relates to XYZ company.

Sales revenues (300 Q) $60,000; Variable costs $15,000; Contribution margin $45,000;

Fixed Costs $9,000; Net operating Income $36,000

Requirements:

1. What would be the break even in dollar sales? [ 2 Marks ]
2. What is the margin of safety as percentage and in unit? [ 2 Marks ]
3. Assume that next month management wants the company to earn a profit of $80,000. How many units will have to be sold to meet the target profit? [ 2 Marks ]
4. Refer to the original data, assume that the company is thinking to slash the variable cost per unit $5 and increasing fixed cost by $40,000. If this change is made, what will be the break-even point in unit sales and dollar sales. [ 3 Marks ]
5. Refer to the original data, assume that next month, to help offset anticipated future decrease in no of customer, the company hires an employee who will be wearing a cartoon character costume I front of the store, that will increase fixed expanse by $4,000. Assume that this would increase the current monthly sales from 300 units to 340 units. Would companys total profit change? By how much? [ 3 Marks ]