Reference no: EM132580409

CDE Ltd has provided you with the following data relating to the product manufactured by his factory:

Selling price per unit                                                           $100
Variable manufacturing costs per unit                                       48
Fixed manufacturing costs per annum                                      250,000
Variable marketing, distribution and administration costs per unit     16
Fixed non-manufacturing costs per annum                                  182,000

Question 1: What is the contribution margin per unit? Show your workings.

Question 2: Calculate quantity to produce to break even in both units and sales dollars. Show your workings.

Question 3: CDE Ltd expects to sell 15,000 units in the coming year. What is the margin of safety at this level of activity?

Question 4: How much profit will the business make for the year if its estimated level of activity of 15,000 units is accurate? Show your workings. CDE Ltd has spare capacity and receives a special order from an interstate retailer for 1,000 units at a price of $80 per unit. Briefly explain why CDE Ltd should accept or reject the order based on financial analysis.

Question 5: List two qualitative factors CDE Ltd ought to take into consideration in a special order decision.