Malume Ltd manufactures and sells a special cellphone for $20. The summarized incomestatement from 2019 is as follows$$Sales800 000Direct materials120 000Direct wages160 000Variable production over heads80 000Fixed administration over heads75 000Fixed production over heads100 000Fixed selling and distribution over heads60 000595 000Net profit before tax205 000Less provision for tax (40%)82 000Net profit after tax123 000Requireda) Calculate the break-even point in dollars and in units for 2019b) Determine the number of units to sell in 2020 in order to achieve after profit of $150 000c) Calculate the sales value required to achieve a net profit before tax of 15% of total revenue

The break-even point is when total cost and total income are equal, indicating that your small firm…

Malume Ltd manufactures and sells a special cellphone for $20. The summarized income statement from 2019 is as follows Sales 800 000 Direct materials 120 000 Direct wages 160 000 Variable production over heads 80 000 Fixed administration over heads 75 000

Malume Ltd manufactures and sells a special cellphone for $20. The summarized income statement from 2019 is as follows Sales 800 000 Direct materials 120 000 Direct wages 160 000 Variable production over heads 80 000 Fixed administration over heads 75 000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 9MC: A company has pre-tax or operating income of $120,000. If the tax rate is 40%, what is the companys...

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Question

Malume Ltd manufactures and sells a special cellphone for $20. The summarized income
statement from 2019 is as follows
$
$
Sales
800 000
Direct materials
120 000
Direct wages
160 000
Variable production over heads
80 000
Fixed administration over heads
75 000
Fixed production over heads
100 000
Fixed selling and distribution over heads
60 000
595 000
Net profit before tax
205 000
Less provision for tax (40%)
82 000
Net profit after tax
123 000
Required
a) Calculate the break-even point in dollars and in units for 2019
b) Determine the number of units to sell in 2020 in order to achieve after profit of $150 000
c) Calculate the sales value required to achieve a net profit before tax of 15% of total revenue

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