Hamza Limited produces and sells two products. Product A sells for £14 per unit and has a total variable cost of £9.90, while Product B sells for £19 per unit and has a total variable cost of £13.20. For every 4 units of Product A sold, three of product B are sold. Hamza Limited fixed costs are £141,850. Budgeted sales revenue is £448,500. Required: a) Calculate the Break-Even points in Units. b) Calculate the Margin of Safety in Units. b) Evaluate the relevance of Break-Even Analysis in decision making process.

Hamza Limited produces and sells two products. Product A sells for £14 per unit and has a total variable cost of £9.90, while Product B sells for £19 per unit and has a total variable cost of £13.20. For every 4 units of Product A sold, three of product B are sold. Hamza Limited fixed costs are £141,850. Budgeted sales revenue is £448,500. Required: a) Calculate the Break-Even points in Units. b) Calculate the Margin of Safety in Units. b) Evaluate the relevance of Break-Even Analysis in decision making process.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Division AA makes a product that sells externally for £50.00 per unit. It has variable production cost of £22.00 per unit, variable selling and administrative cost of £7.00 per unit, fixed production cost of £1,000,000 per year, and fixed selling and administrative cost of £500,000 per year. Production capacity is 250,000 units per year. Division AA is selling all it can produce externally at £50.00 per unit. Division BB can buy externally at £48.00 per unit. Division BB needs 30,000 units. Should a transfer take place, and if so what are the rational limits on the range of transfer prices? a. no transfer should take place b. a transfer should take place at £50 C. a transfer should take place at £48 d. a transfer should take place between £48 and £50
Lablanc Inc. sells a product for $60 per unit. The variable cost is $34 per unit, while fixed cost are $108,160. Determine (a) the break-even point in sales unit (b) the break-even point if the selling price weee increases to $66 per unit.
igelow Inc. sells a product for $1,200 per unit. The variable cost is $816 per unit, while fixed costs are $3,120,000. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $1,232 per unit. a. Break-even point in sales units units b. Break-even point if the selling price were increased to $1,232 per unit
Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $100 per unit and has a CM ratio of 40% The company's fixed expenses are $459,000 per year. The company plans to sell 12,000 knapsacks this year. Required: 1. What are the variable expenses per unit? Variable expenses per unit 2. Use the equation method for the following e. What is the break-even point in units and in sales dollars? Break-even point in units Break-even point in sales dollars b. What sales level in units and in sales dollars is required to earn an annual profit of $99,000? Sales in units Sales in dollars c. What sales level in units is required to earn an annual after-tax profit of $99,000 if the tax rate is 25%? Sales in units d. Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $5 per unit. What is the company's new break-even point in units and in sales dollars? (Do not round Intermediate calculations.…
Ladder Co. produces and sells only two products, Yang and Yin. 6 units of Yang are sold for every 4 units of Yin. Variable costs as a percentage of sales in pesos are 60% for Yang and 85% for Yin. Total fixed cost is P150,000. Assuming that the total fixed cost of Vader Co. is expected to increase by 30% next period, what amount of Yin sales in pesos would be necessary to breakeven?
Lindon Company is the exclusive distributor for an automotive product that sells for $50.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $345,000 per year. The company plans to sell 27,200 units this year. Required: What are the variable expenses per unit? Note: Round your "per unit" answer to 2 decimal places. What is the break-even point in unit sales and in dollar sales? What amount of unit sales and dollar sales is required to attain a target profit of $195,000 per year? Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $5.00 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $195,000?
Davis Corporation manufactures a single product. The selling price is $340 per unit, and variable costs amount to $68 per unit. The fixed costs are $16,500 per month. What will be the monthly margin of safety (in dollars) if 200 units are sold each month? Select one: a. $82,375. b. $70,375. Oc. $47,375. Od. $12,375.
Elrod Inc. sells a product for $75 per unit. The variable cost is $45 per unit, while fixedcosts are $48,000. Determine (a) the break-even point in sales units and (b) the breakeven point if the selling price were increased to $95 per unit.
Finley Corporation has monthly fixed costs of $67,000. It sells two products for which it has provided the following information. Contribution Sales Price Product 1 Product 2 $15 20 Margin $9 4 a. What total monthly sales revenue is required to break even if the relative sales mix is 30 percent for Product 1 and 70 percent Product 2? (Hint: Determine the contribution margin ratio for each product.) (Round your answer to the nearest dollar amount.) b. What total monthly sales revenue is required to earn a monthly operating income of $16,000 if the relative sales mix is 20 perce for Product 1 and 80 percent for Product 2? (Round your answer to the nearest dollar amount.) Answer is complete but not entirely correct. a. Break even sales revenue $ 190,625 b. Target sales revenue $275,000 B
(a) A company manufactures a single product which has variable cost of £40 per unit. The contribution to sales ratio is 45%. Monthly fixed costs are £198,000. What is the breakeven point in pounds and in units? (b) John makes and sells a product which has a variable cost of £60 and sells for £80 per unit. Budgeted fixed costs are £140,000 and budgeted sales are 16000 units. Determine the sales required to achieve this profit What is the breakeven point and margin of safety? (c) TLF Ltd wishes to sell 28,000 units of its product, which has a variable cost of £30 to make and sell. Fixed costs are £94,000 and required profit is £26,000. Calculate the sales price per unit (d) Apple Ltd makes and sells a single product, for which variable costs are follows:Direct materials $20Direct labour $16Variable production overhead $12…