Reference no: EM132486912

Question - Ventana Inc. sells a single product for $48. Its management estimates the following revenues and costs for the year 2019:

Net Sales $620,000

Selling expenses - Variable $18,500

Direct Materials 85,000

Selling expenses - Fixed 21,500

Direct Labour 78,000

Admin expenses - Variable 3,500

Mfg Overhead - Variable 32,000

Admin expenses - Fixed 2,500

Mfg Overhead - Fixed 25,000

Required -

1. Assuming fixed costs and net sales are spread evenly throughout the year, determine Ventana's monthly break-even point in (a) units and (b) dollars.

2. Calculate the contribution margin ratio, the annual margin of safety ratio, and the annual profit

3. Determine the percentage increase of annual profits if Ventana Inc. increases its selling price by 25% and all other factors (including demand) remain constant.

4. Assume the price remains at $48 per unit and variable costs remain the same per unit, but fixed costs increase by 15% annually. Calculate the percentage increase in unit sales required to achieve the same level of annual profit calculated in required # 2

5. Determine the sales required to earn an operating income of $375,000 after tax. Ventana Inc.'s income tax is 28%.