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What sales are required to achieve a profit

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Reference no: EM133140121

Question - Cost volume profit analysis (15 marks) Multi-Make Ltd manufactures self-assemble radio kits. Each unit sells for $8, and the business has a relevant range of production between 30,000 and 60,000 units per year. The budget for the coming year is as follows

Sales (50,000 units) $400,000 Less variable costs Manufacturing Direct Material $87,500 Direct Labour $57,500 Variable Overhead $50,000 Total Manufacturing $195,000 Marketing Advertising salaries $105,000 Total Variable cost $300,000 Contribution Margin Less Fixed costs Manufacturing $ 45,000 Marketing $ 27,000 Total Fixed Cost $ 72,000 Profit before tax $28,00

Required -

a) The company wishes to know what sales are required to achieve a profit before tax of $45,000?

b) The firm also wants to know what sales are necessary to provide a profit of 10% on sales?

c) Explain and describe the meaning of outcome a and b.

Reference no: EM133140121

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