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What is the contribution margin per pack of light bulbs

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Reference no: EM133188923

Question - Flash Ltd. is a manufacturing company producing and selling LED light bulbs for $60 per pack. The direct labour cost for each pack of light bulbs is $15 and the total cost of materials is $25 per pack. Flash's total fixed cost for the year is $300,000.

Required -

a. What is the contribution margin per pack of light bulbs for Flash?

b. How many packs of light bulbs Flash have to sell to reach the break-even point?

c. How much profit will Flash earn at a sales volume of 25,000 packs?

d. Flash's target profit for next year is $160,000. How many packs must the company sell to earn this target profit?

e. Flash's total fixed cost for next year will increase to $400,000 due to a rent increase. To cope with this increase, Flash is considering increasing the selling price to $80. The variable cost per pack of light bulbs would remain unchanged. How much revenue must the company make to reach the break-even point?

Reference no: EM133188923

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