ASSIGNMENT
The first question:
A store that sells t-shirts. The average selling price is 15 riyals, the average variable cost (cost price) is 9 riyals, and the total fixed costs are 100,000 riyals. A. Determine the size of the break even point in value and the size of the break-even point in units?
- If the owner wants a profit of 25,000 riyals, how many shirts are required to be sold to achieve this?
- If fixed costs rise to 110,000 riyals, the break-even point in units will be?
- If the selling price rises to 16 riyals, will the break-even point size decrease and why? second question: Khaled’s company manufactures and sells a single product. The company’s sales and expenses for the last month were: Rate unit cost total (in riyals) 100% 25 500,000 the sales 40% 10
200,000
(-) Variable costs 60%
15th 300,000
contribution margin 270000
(-) Fixed costs 30000
net income
Required:
- Calculate the break-even point
in terms and units:
- Using the equation method
- Use the contribution margin
method
- What is the contribution margin and the contribution margin percentage at the break-even point?
- How many units must be sold each month to earn the minimum target net income of 60,000 riyals?
- Calculate the break-even point ratio?
- Calculate the company’s safety margin in value and percentage?
- What is the company’s contribution margin if the monthly sales increase by 25,000 riyals and there is no change in the fixed costs?
- If the company is able to reduce the variable cost per unit by one riyal per unit, what is the new monthly break-even point?
- Calculate the degree of operating leverage If sales increase by 10%, how much will net income increase?
