Question 
PART A 
A company manufactures a single product and the data concerning the product is as follows:
-  Sales price of $10  
-  Marginal cost of $6.  
-  Fixed costs are $60,000 p.a.
Determine
a.  Number of units to break-even.
b.  Sales at break-even point.
c.  Contribution/sales (C/S) ratio
d.  What number of units will need to be sold to achieve a profit of $ 20,000 p.a
e.  What level of sales will achieve a profit of $ 20,000 p.a
f.  Because of increasing costs the marginal cost is expected to rise to $ 6.50 per unit and fixed costs to $ 70,000. If the selling price cannot be increased what can be the number of units required to maintain a profit of $ 20,000 p.a?
 
PART B 
(i)  Your company regularly uses material X and currently has in inventory 500 kgs for which it paid $ 1,500 two weeks ago. If this were to be sold as raw material, it could be sold today for $ 2.00 per kg. You are aware that the material can be bought on the open market for $ 3.25 per kg, but it must be purchased in quantities of 1,000 kgs.
Required:
Evaluate the relevant cost of 600 kgs of material X to be used in a job for a customer.
 
(ii)  In the short term decision-making context, which one of the subsequent would be a relevant cost:
-  Specific development costs already incurred.
-  The cost of special material which will be purchased.
-  The original cost of raw materials currently in inventory which will be used on the project.