Tulips Events International: breakeven target profit CVP
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a. Tulips Events International sells tickets for two types of events: jazz concert and antiques exhibition. The following information relates to each of the event, expressed on a per-case basis:
(see the attached table)
Required: Compute the followings:
i) The total monthly sales revenue required to break-even.
ii) The total monthly sales revenue required to earn an operating income of RM135,000.
iii) The company's margin of safety at a monthly sales level of RM2,500,000.
iv) If monthly fixed costs increase by RM10,000, what is the break-even point, expressed in sales dollars?
b. Skywalker Incorporation produces and sells remote-controlled helicopters for RM250 each. The variable costs of each helicopter total RM160 while total monthly fixed costs are RM19,800. Current monthly sales are RM100,000. The company is considering a proposal that will increase the selling price by 10%, increase total fixed costs by 10% and increase unit sales to 500 units per month.
i) Compute the company's current break-even point in units and dollars.
ii) What is the company's current margin of safety in units, dollars, and percentage?
iii) Compute the company's margin of safety in units assuming the proposal is accepted.
iv) Compute the increase or decrease in profit assuming the proposal is accepted.
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