Reference no: EM132998047
Question - Two companies Martin and Kelly manufacture the similar hand-sanitizing products. The following data for the two companies for the year 2020 are provided below:
Martin ($) Kelly ($)
Sales revenue 120,000 144,000
Total costs 84,000 96,000
Variable Costs 40 % of sales revenue 50%
Required -
1- Calculate the Break Even Point (BEP) in dollars of product for each company.
2- Calculate the percentage margin of safety for each company.
3- If sales of the product in Martin company are equal to 5,400 units, determine the BEP (in units), and present the Break-even chart.
4- In 2020, company Martin plans to increase the variable cost by $2 while the fixed cost and the selling price will remain constant. Calculate the number of units to be sold in order to earn the same profit as Kelly in 2020.
5- Based on your answers to parts 1 and 2, Discuss which company has a safer financial position, and why.
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