Problem: The trading results of Fit-All Instruments for its 1st year of operations are expected to be as follows:
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Sales (@ R4 per unit)
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R 320 000
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Less:
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|
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Material
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R 120 000
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|
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Wages
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48 000
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|
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Variable Overhead Costs
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24 000
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|
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Fixed Overhead Costs
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50 000
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242 000
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Profit
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78 000
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You are required to calculate:
1) The break-even point in units.
2) The company’s margin of safety in units.
3) The number of units the company should sell in order to earn a net income of R90 000.
4) The price per unit at which they should sell to achieve the same profit in the following year if the total variable cost per unit increased by R0.80.