Texts: Question 1 [10 marks]
The following relates to a concern for a particular period:
Sales = 10,000 units at $40 each
Variable cost = $20 per unit
Fixed cost = $100,000
Calculate below:
a) PV Ratio
b) Break even sales
c) Margin of safety
2. Calculate below:
a) The new PV Ratio
b) New Break even sales
c) Margin of safety
d) Sales to earn the same amount of profit that the concern had been earning earlier after reducing the selling price by 10%
e) Number of units to be sold to get a profit of $60,000 at the reduced price.