Reference no: EM132559644
Question - Novena Pumps Pte Ltd manufactures and sells swimming pool filter pumps. Price and cost data are as follows:
Selling price per unit $25.00
Variable costs per unit:
Direct material $10.50
Direct labour 5.00
Manufacturing overhead 3.00
Selling costs 1.30
Total variable costs per unit $19.80
Annual total fixed costs:
Manufacturing overhead $192,000
Selling and administrative 276,000
Total fixed costs $468,000
Forecast annual sales (120,000 units) $3,000,000
Required -
1. What is Novena's break-even point in units?
2. What is the company's break-even point in sales dollars?
3. Explain how Novena Pumps could use break-even and cost-volume-profit (CVP) analysis for planning and control purposes.
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