ABC company has provided the following information about the company Sales = $210000 PRODUCTION Variable...
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ABC company has provided the following information about the company Sales = $210000 PRODUCTION Variable cost [manufacturing] = $ 43000 Fixed cost [manufacturing 1= $75000 SELLING & ADMIN Variable cost = $25000 Fixed cost = $32000 Units produced = 1500 Production capacity = 2000 units REQUIRED 1. Calculate CM per unit; CMR 2. Determine the breakeven point in units and $ 3. Calculate margin of safety in $ & %. 4. The sales manager believes that the company could increase sales by 700 units if advertising is increased by $15000. Should the company increase advertising expenses? 5. Determine the sales revenue necessary to generate before tax profit of $48000. 6. Determine sales revenue necessary to generate after-tax profit of $27000 if tax rate is 30% 7. Calculate degree of leverage (DOL) and if sales increases by 20%, what will be the net income of this company. (use original data in the beginning]
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