Blue Company manufactures and sells a single product. The following are the cost and selling...
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Accounting
Blue Company manufactures and sells a single product. The following are the cost and selling structure: Selling Price (per unit)$60 Less: Direct materials (per unit)$11 Direct labour (per unit).$18 Variable overhead (per unit)..$7 Labour overhead (per unit).$6 Profit (per unit).$18 The fixed overhead is based on normal capacity of 1,000 units per month. Assume that the same amount is spent each month on fixed overheads. Budgeted sales for the next month are 1,100 units. Required: (i) calculate the break-even point in sales units and sales dollars per month. (4 marks) (ii) calculate the margin of safety in units for next month. (2 marks) (iii) calculate the budgeted profit for next month. (2 marks) (iv) calculate the sales units and sales dollars required to achieve a profit of $12,000 in a month. (4 marks) (iv) explain three (3) key assumptions in carrying out break-even point or cost-volume-profit analysis. (3 marks)
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