Reference no: EM133162078

Question - H&H Company manufactures and sells a single product. The company's revenue and expenses for the last quarter follow:

Per unit

Revenue £550,000

Less Variable cost £190,000

Contribution margin £360,000

Less Fixed expenses £250,000

1- What is the quarterly break-even point in units sold and in revenue?

2- What is the total contribution margin at the break-even point?

3- How many units would have to be sold each quarter to earn a target profit of £70,000? Use the unit contribution method. Verify your answer in a contribution statement of profit or loss at the target level of revenue.

4- What is the company's CM ratio? If revenue increase by £70,000 per quarter and there is no change in fixed expenses, by how much would you expect quarterly profit to increase? (Do not be in a statement of profit or loss; use the CM ratio to compute your answer.)

5- What is meant by the margin of safety?

6- Distinguish between (a) a variable cost, (b) a fixed cost, and (c) a mixed cost.