Reference no: EM133078645
Question - Grillstua AS has a product: standard barbecue hut. The barbecue hut is sold for NOK 80,000. Variable cost per cabin is NOK 36,000. The company's total fixed costs per year are NOK 4,224,000. The company sells 100 cabins a year.
a) Calculate the contribution margin per barbecue hut.
b) Calculate the total annual result (profit or loss).
c) What is the coverage ratio?
d) What is the zero point turnover in NOK and the number of units? You must find the zero point both when calculating and by preparing a zero point diagram.
e) Calculate the safety margin; measured in kroner,% and number of barbecue huts.
f) The chairman of the board believes that one should have a profit of 660,000. How many barbecue huts does the company have to sell then?
Grillstua's management decides to start producing another model: A larger and more "luxurious" model. The luxury model is sold for NOK 110,000. Variable cost per cabin is NOK 67,000. The company expects to sell 40 luxury cabins a year. At the same time, the production of a standard barbecue hut with 100 units a year is maintained. There is no change in the fixed costs.
g) What will be the company's coverage ratio?
h) What is the company's new overall result?
i) Calculate the zero point turn-over and the safety margin for the company.
j) Give an explanation of the change in result between b) and h).
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