Reference no: EM133059231

Question - The following budget data apply to hemphrrey foods:

Sales (100,000)

Costs $1,000,000

Direct labour 200,000

Direct materials $300,000

Fixed factory overheads 100,000

Variable factory overheads 150,000

Marketing & administration 160,000

Total cost 910,000

Budgeted pre-tax profit $90,000

Direct labour workers are paid hourly wages and go home when there is no work. The marketing and administration cost include $50,000 that varies proportionately with production volume. Assume that sales and production volumes are equal

Calculate the number of units that must be sold to achieve a target after-tax income of $120,00, assuming the tax rate is 40 per cent.

Calculate the margin of safety in both revenues and units.

Calculate the degree of operating leverage.