Reference no: EM132406539
Question :
Details of Keira Pty Ltd's income statement for the past year are as follows:
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Sales (18 000 units) Cost of sales:
|
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$990,000
|
|
Direct materials
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$290,000
|
|
|
Direct labour
|
310,000
|
|
|
Variable factory overhead
|
102,000
|
|
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Fixed factory overhead
|
42,000
|
744,000
|
|
GROSS PROFIT
|
|
246,000
|
|
Variable selling expenses
|
96,000
|
|
|
Fixed selling and admin expenses
|
30,000
|
126.000
|
|
PROFIT BEFORE TAX
|
|
120,000
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Income tax expense (30%)
|
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36.000
|
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PROFIT
|
|
84,000
|
Required:
Consider each of the following independent situations:
1. Determine the company's break-even point in units and sales dollars. What is the margin of safety?
2. If the company wants to make an after-tax profit of $100,000, what is the dollar level of sales necessary to reach its goal?
3. If the sales volume is 15,000 units, what is the selling price needed to achieve an after-tax profit of $100,000?
4. If the company's sales volume increases by 10% as a result of increasing fixed selling expenses by $10,000 and variable selling expenses by $0.60 per unit, what is the company's after-tax profit?
5. If direct material costs increase 15%, direct labour costs increase 10%, variable overhead costs increase 15%, and fixed overhead increases by $10 000, how many units must be sold to earn an after-tax profit of $100,000? Round your calculations to the next highest unit.