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Acme Ltd has a target profit of $300,000. The fixed costs within relevant range of production are $180,000. Company sells its products at selling price of $100 per unit; the unit variable cost is $40.
Required:
Problem 1) Calculate break even sales in units and dollar value
Problem 2) How many extra units company needs to sell to achieve targeted profit?
Problem 3) What is the total sales value necessary to obtain the required profit of $300,000?
Problem 4) Explain the difference between contribution to sales ratio and margin of safety.
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