Calculate the breakeven point in sales dollars

Reference no: EM133065775

Cost Volume Profit Analysis

Aim: To assist managers in making decisions to improve PROFITABILITY and increase shareholder value

Question 1: ABC Ltd sold 6000 handbags at the price of $100. The costs to produce one handbag include:
Direct materials worth $28
Direct labour of 1.5 hours @ $14 per hour Variable MOH of $16.
Total fixed costs are $48,000

Calculate:
1 The contribution margin per handbag
2 The Contribution margin ratio. 3 Contribution margin percentage 4 The total contribution margin.

Question 2: The promoters of The Voice want to know how many tickets they need to sell for the final concert to breakeven on all the costs associated with the production. The information you have been given is:
Selling price = $100 per ticket Total Fixed costs = $ 750 000 Variable costs = $25 per ticket

How many tickets need to be sold to cover all the costs? And how much revenues must be generated to breakeven?

Question 3: A small theatre company (330 seats) has planned for 30 performances. On average 65% of seats will be sold. The sales price per ticket is $80 and variable costs per ticket are $30. Fixed costs are $320 000 in total.

Calculate:
a. The breakeven point in sales dollars
b. The safety margin for this production

Question 4: The promoters of The Voice want to know how many tickets they need to sell for the final concert to breakeven on all the costs associated with the production. The information you have been given is:

Sales price = $100 per ticket Total Fixed costs = $ 750 000 Variable costs = $25 per ticket

How many tickets need to be sold to make a profit of $250 000? And how much revenues must be generated to achieve a profit of $250 000?

Question 5: Information for ABC Ltd is provided below:

Selling price	$ 10
Variable cost per unit: Manufacturing cost per unit Selling cost per unit	$ 5 $ 1.40
Annual Fixed costs Selling Administration	$ 240 000 $ 380 000
After tax profit target	$ 126 000
Tax rate	30%

Required: Calculate number of units that need to be sold in 2011 to achieve the after tax target profit

Question 6: Healthylife Ltd produces three different frozen meals: Beef, Pork and Chicken meals.

	Beef	Pork	Chicken
Sales mix in units	30%	50%	20%
Selling price/unit	$8	$7	$6
Variable costs	$3	$2.5	$2

Calculate the weighted average unit contribution margin

Question 7: The Opera House has decided to offer seats at two different prices:
VIP Seats: $700 per ticket with only 250 seats available
Normal Seats: $270 per ticket with 2250 seats. Variable cost per unit is $100.
Fixed costs are $310 000

Required:
Calculate breakeven point in seats. Specifically, how many of each seat we need to sell to breakeven?

Reference no: EM133065775

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