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A company makes a single product with a sale price of Kshs. 10 and a marginal cost of Kshs. 6. Fixed costs are Kshs. 60,000...

A company makes a single product with a sale price of Kshs. 10 and a marginal cost of Kshs. 6. Fixed costs are Kshs. 60,000 p.a.
Calculate;
(a) Number of units to break even.
(b) Sales at break – even point.
(c) C/S Ratio
(d) What number of units will need to be sold to achieve a profit of Kshs. 20,000 p.a
(e) What level of sales will achieve a profit of Kshs. 20,000 p.a
(f) As (d) with a 40% tax rate
(g) Because of increasing costs the marginal costs is expected to rise to Kshs. 6.50 per unit and fixed costs to Kshs. 70,000 p.a . if the selling price cannot be increased what will be the number of units required to maintain a profit of Kshs. 20,000 p.a (ignore tax)

Answers

Wilfred
Contribution = S – Marginal Cost
= 10 – 6=4
mc11542019237.png
Wilfykil answered the question on April 15, 2019 at 11:38

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