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How many clothes must be sold to break even

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Reference no: EM132614063

Candy Garment Co., produces a particularly casual fashion collections. Average variable unit costs are as follows (per unit cloth):

Cotton Fabric with standard 1.5 metres @ Rp. 20,000 =

Rp. 30,000

Rp. 2,500

Rp. 100,000

Rp. 15,000

Rp. 3,000

Rp. 30,000

Accesories with standard 5 bottons

Labor 3 hours @ Rp. 30,000

Supplies 3 items @ Rp. 5,000

Box, packing material @ Rp. 3,000

Selling Commission

@ Rp. 500

=

Fixed overhead cost (including depreciation of office and factory building, depreciation machine of office and building, supervisor's salary, etc)

Fixed selling and administrative costs are = Rp. 12,000,000

= Rp. 8,000,000

Average Candy Garment Co., sell their product Rp. 350,000 each on average. Last year Candy Garment Co., sold 380 unit.

Required:

Question 1: What is the contribution margin per unit cloth? What is the contribution margin ratio?

Question 2: How many clothes must be sold to break even? What is the break-even sales revenue?

Question 3: What was Candy Garment's operating income last year? What was the margin of safety?

Question 4: Suppose that Candyland, Inc., raises the price to Rp. 500,000 per cloth but anticipates a sales drop to 180 clothes. What will the operating income? What new break-even point in units be with the new price?

Reference no: EM132614063

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