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You've just been hired by ABC Inc to lead their managerial accounting department. On your first day they provided with data from their production department for the month of November $2023,$ but some information was missing.

$$ Units produced in November: $5,000$

Units sold in November. $4,000$

$$ Direct materials purchased in November. $$26,500$

$$ Direct materials balance, Nov $1$: $$6,700$

$$ Direct materials balance, Nov $30$: $$3,500$

Direct labour hours used in November: $750$

Variable manufacturing overhead: $10\%$ of direct labour cost

$$ Fixed manufacturing overhead: $43,500$ per month

Sales commissions are $8\%$ of sales

$$ Fixed selling expenses are $$12,000$ per

Units are sold for $$46$

$$ The tax rate is $35\%$

You estimate that manufacturing costs and sales are consistent year round and direct labour workers are paid $$30$ per hour. Assume there is no beginning or ending work in process.

Tasks: Answer the following questions

a$)$ Calculate the direct materials used

b$)$ Calculate the variable manufacturing cost per unit

c$)$ Calculate the contribution margin per unit

d$)$ What is the monthly break$-$even point in units?

e$)$ What is the annual break$-$even point in dollars?

f$)$ How many units must be sold to earn an after$-$tax operating income of $$80,210?$

g$)$ If $2,000$ units are sold, what is the margin of safety?

h$)$ If $2,000$ units are sold, what is the degree of operating leverage?

i$)$ Using the degree of operating leverage, what will be the change in after$-$tax operating income if sales increase by $20\%?$

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