Reference no: EM132565380
CDE Ltd has provided you with the following data relating to the product manufactured by his factory:
Selling price per unit $ 100
Variable manufacturing costs per unit 48
Fixed manufacturing costs per annum 250,000
Variable marketing, distribution and administration costs per unit 16
Fixed non-manufacturing costs per annum 182,000
Question 1: What is the contribution margin per unit? Show your workings.
Question 2: Calculate quantity to produce to break even in both units and sales dollars. Show your workings.
Question 3: CDE Ltd expects to sell 15,000 units in the coming year. What is the margin of safety at this level of activity?
Question 4: How much profit will the business make for the year if its estimated level of activity of 15,000 units is accurate? Show your workings.
Question 5: CDE Ltd has spare capacity and receives a special order from an interstate retailer for 1,000 units at a price of $80 per unit. Briefly explain why CDE Ltd should accept or reject the order based on financial analysis.
Question 6: List two qualitative factors CDE Ltd ought to take into consideration in a special order decision.
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