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What selling price per unit of product must charge

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Reference no: EM132956579

Divine DVDs Pty Ltd manufactures and sells DVDs. Price and cost data are in the following table.

Selling price per unit $ 25.00

Variable costs per unit:

Direct material $ 8.20

Direct labour 4.00

Manufacturing overhead 6.00

Selling costs 1.60

Total variable costs per unit $ 19.80

Annual fixed costs:

Manufacturing overhead $288 000

Selling and administrative 414000

Total fixed costs $ 702 000

Forecast annual sales (140 000 units) $3 500 000

(In the following requirements, ignore income taxes.)

Required:

Problem 1: What is Divine DVDs' break-even point in units?

Problem 2: What is the company's break-even point in sales dollars?

Problem 3: How many units would Divine DVDs have to sell in order to earn a profit of $ 390000?

Problem 4: What is the firm's safety margin?

Problem 5: Management estimate that direct labour costs will increase by 10 per cent next year. How many units will the company have to sell next year to reach its break-even point?

Problem 6: If Divine DVDs' direct labour costs do increase by 10 per cent, what selling price per unit of product must it charge to maintain the same contribution margin ratio?

Reference no: EM132956579

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