90.2K

Verified Solution

Link Copied!

Aziz, a sole trader, owns and manages a business which manufactures and sells one special type of tool for home improvement stores. Set out below is the sales revenue and profit for $2023$: Year sales was $464,820$ profit was $146,522$ In $2023,$ the business manufactured and sold $104,000$ units and had fixed costs of $121,370.$ All other costs were variable. A$.$ Calculate the selling price and variable cost per unit for $2023.($Answers should be to the nearest penny? B$.$ Calculate the sales revenue level, both in units and money terms, at which the business broke even in $2023?$ C$.$ Complete a contribution analysis table that indicates fixed, variable and total costs, as well as revenue, for $2023$ at production levels of $0,100,000,200,000$ and $300,000$ units? D$.$ Illustrate your answers to $($a$),($b$)$ and $($c$)$ above on a breakeven chart that shows revenue, total cost and fixed cost lines with an appropriate legend for each. Your chart should be labelled with an arrow that points to the breakeven point as well as to the margin of safety area? E$.$ Aziz had considered spending an additional $16,400$ on advertising in $2023.$ He predicted that such an additional investment would have increased the sales and production volume in the year to $108,000$ units at a better selling price of $4\mathrm{.}60.$ He also predicted there would have been no other changes to his fixed costs for the year nor any changes to the variable cost per unit? If his predictions had proved correct, what would have been his new profit for the year? If his predictions had proved correct, what would have been his new breakeven point, in units, for the year?

Answer & Explanation Solved by verified expert

See Answer