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Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following information to...

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Accounting

Benoit Manufacturing Company manufactures and sells parts for various musical gadgets. The following

information to a single part which is used in the production of a wind instrument. The business earned

Operating Income of $220,000 in 2019, when production was 3,000 units and the president of Darius is under

pressure from shareholders to increase operating income in 2020 and is therefore considering the

implementation of strategies mainly geared at increasing revenues and or decreasing variable costs. Data for

variable cost per unit and total fixed costs were as follows:

Variable expenses per unit: Direct Material $58

Direct Labour $74

Variable Manufacturing Overhead $48

Fixed expenses: Fixed Manufacturing Overhead $215,000

Fixed Selling Costs $65,000

Fixed Administrative Costs $160,000

Required:

g) Briefly explain the impact of each of the following scenarios on the break-even point and the margin of

safety:

(i) Increase in sales volume

(ii) Increase in total fixed costs

(iii) Increase in selling price per unit

(iv) Decrease in variable costs per unit

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