What is the contribution margin per unit and ratio

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Reference no: EM133059364

Question - Woodpecker Ltd. produces and sells body boards. It has experienced steady growth over the last 10 years. However, a recent increase in market competition has led Tupac the manager, to believe there is a need for an aggressive campaign next year, 2022 to maintain the entity's present growth. The accountant has provided Tupac with the following data to prepare next year's campaign.

Cost Schedules

Variable costs Per Unit ($)

Direct labour 13.00

Direct materials 8.00

Variable overhead 4.00

Variable cost per Body Board 25.00

Fixed costs

Manufacturing $75,000

Selling 65,000

Administrative 60,000

$200,000

Selling price per Body Board $50.00

Expected sales, 2022 $800,000

Required (show your working):

Required -

1. What is the projected operating profit for 2022?

2. What is the contribution margin per unit and ratio for 2022?

3. What is the break-even point in units and dollars for 2022?

4. How many units and dollars would have to be sold in 2022 to earn target profit of $126,000?

5. Calculate the margin of safety in units and dollars for 2022?

Reference no: EM133059364

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