(Solved): ABX Manufacturing Company Limited specializes in the production of premium quality sandals for the l ...

ABX Manufacturing Company Limited specializes in the production of premium quality sandals for the local market. The production plan for the next financial year are as follows:

• Selling price per unit  = $45
• Variable cost per unit = $25
• Fixed cost                   = $40,000

Required

1. Calculate the contribution margin per unit.
2. Calculate the breakeven point in units.
3. Calculate the number of units required to be sold if the company wishes to make a profit of $75,000.
4. Independent to your calculation in part (a) - (c) above, the operations manager suggests the following changes would take place in the next financial year due to the impact of Covid 19.

• Selling price per unit is expected to decline by $5.00
• Variable cost per unit is expected to increase by $2.00
• Fixed cost is expected to decrease to $28,600

         Calculate the following:

1. Revised contribution margin per unit.
2. Revised breakeven point in units.
3. Number of units required to be sold to make the same level of profits as in (c) above.