Question 2: (35 Marks) Two companies, Ghost and Phantom manufacture similar printer color cartridges. The...
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Accounting
Question 2: (35 Marks)
Two companies, Ghost and Phantom manufacture similar printer color cartridges. The following data for the two companies for the year 2020 are provided below:
information
Ghost $
Phantom $
sales revenue
90,000
108,000
total cost
63,000
72,000
variable cost
40% of sales revenue
40 %
Required:
1- Calculate the BreakEven Point (BEP) in dollars for each company. (8 Marks)
2- Calculate the percentage margin of safety for each company. (8 Marks) percentage margin of safety for Chost = (Sales BEP) / Sales
3- If sales of the product in Ghost company are equal to 3,000 units, determine the BEP (in units), and present the Break-even chart. (8 marks)
4- In 2020, Phantom plans to increase the variable cost by $4 while the fixed cost and the selling price will remain constant. Calculate the number of units to be sold in order to earn the same profit as Ghost in 2020. (6 Marks)
5- Based on your answers to parts 1 and 2, Discuss which company has a safer financial position, and why. (5 Marks)
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