Question

(BEP, CVP before and after tax) Polk Company developed the following information for Its product: Per Unit Sales Price $ 90.00 Variable cost 54.00 Contribution Margin $36.00 Total Fixed costs $1.260,000

Answer 1

Break Eron Point fizod cost Contribution au - = 1,260,000 1,260,000 = 35,000 units. - 35,000 units. 36 o contribution Margin ratio : Contribution One - Sales - 36 - 90 0.40 (6) No. of Unila to be = (fixed produced lost & contribution per unit = (1,260,000 + 60,000)/36 = 36,667. Sales value : 36,667 x 90 = 53,300,000 Dosired Desired Profit after tox = $45000 profit before tor = 45000 (150-30% = $ 64,285,71 of units to be oold = (fixed lost & Proft) Contribuhan pu. (,260,000 + 64,28571 36 = 36,785.7 = 36,786 units

2 Margin of safety = (Current Salon - Ble Sales & SP = (36,786 - 35,000) X90 : $160,740 Lol Units: Cant (OX 36) fixed cost (d) Net Income (bac) Current 45,000 $1,620,000 $1,260,000 $360,000 || Proposed no. of units = (1,260,000+ 360,000+ 90000) 36 = 47,500 unils Addition of units to be sold : 47,500- 45,000 - 2,500 units Sales volue $ 3,30,000 II Mos Camount) a = sales value - Bl & sales 3,300000 - (35000 190) $150.000