Need Requirement 4 and 5 only Question 3: Variable cost per unit $20 – price $30 – total fixed cost $ 50,000 Expected sales 8000 units- target profit $ 20,000 Required: 1- Compute break-even volume and value 2- Compute the quantity of sales that achieve the target profit 3. Compute the safety margin ratio. 4- If the variable cost increases by 20%, what is the effect on break-even volume. 5. If the fixed cost decreases by 20%, what is the effect on break-even volume.
Need Requirement 4 and 5 only Question 3: Variable cost per unit $20 – price $30 – total fixed cost $ 50,000 Expected sales 8000 units- target profit $ 20,000 Required: 1- Compute break-even volume and value 2- Compute the quantity of sales that achieve the target profit 3. Compute the safety margin ratio. 4- If the variable cost increases by 20%, what is the effect on break-even volume. 5. If the fixed cost decreases by 20%, what is the effect on break-even volume.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Need Requirement 4 and 5 only
Question 3:
Variable cost per unit $20 – price $30 – total fixed cost $
50,000
Expected sales 8000 units- target profit $ 20,000
Required:
1- Compute break-even volume and value
2- Compute the quantity of sales that achieve the target
profit
3. Compute the safety margin ratio.
4- If the variable cost increases by 20%, what is the effect
on break-even volume.
5- If the fixed cost decreases by 20%, what is the effect on
break-even volume.
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