Calculate the number of basic and the number

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Reference no: EM133502585

Cost-Volume-Profit Analysis

Gram Ltd sells two products: Basic and Platinum. Information about the expected sales volume, selling price and variable cost per unit of the products are as follows:

Basic	Platinum
Selling price	$20	$ 35
Variable cost per unit
Direct material	$6	$12
Direct labour	$4	$6
Manufacturing overhead	$2	$3
Budgeted monthly sales volume	360	440

The expected monthly fixed cost is $2,000.

Assume that Gram Ltd pays income taxes of 28% and that fixed costs remain constant regardless of the number of product lines.

Required:

Assume that only Basic is sold. Calculate the following:

Break-even in dollars.

Target sales volume in dollars, assuming a target profit of $1,500 after tax.

Margin of safety as a percentage.

Assume that both products are sold (Basic and Platinum). Calculate the number of Basic and the number of Platinum that needs to be sold to break-even.

Reference no: EM133502585

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