Reference no: EM133101773

Question - Cost Volume Profit Analysis - Orange manufactures and sells mobile phones. They only make one model of mobile phone called the "oPhone". Data relating to this product for 2022 is below:

Selling price per unit $1,500

Variable manufacturing costs per unit $900

Variable marketing and distribution costs per unit $250

Fixed manufacturing costs per year $675,000

Fixed non-manufacturing costs per year $375,000

Required -

1. Explain the difference between fixed and variable costs using examples.

2. Calculate the break-even point in units (oPhones).

3. Calculate the margin of safety for 2022 if budgeted sales are 4,000 units (oPhones).

4. How many units (oPhones) would Orange need to sell to earn a target profit of $700,000.