The income statement for ABC's 2012 fiscal year is presented below. ABC manufactures one type of street lamp used on municipal roads.
Variable cost of goods sold 1,680,000
Variable sales commissions 120,000
Contribution margin 600,000
Selling expense 105,000
Sales commissions expense 48,000
Administrative expense 212,000
Net income 235,000
Variable costs per unit are £6.
Complete the following:
Please note: Round all answers to two decimal places.
1. Calculate break-even in pounds.
2. Calculate break-even in units.
3. Calculate break-even in pounds if the sales price increases by 10% and fixed costs increase by £12,000.
4. Calculate break-even in pounds if total sales increases by 10% and fixed costs increase by 10%.
5. Calculate sales (in pounds) to achieve £600,000 after tax. (Note: The tax rate is 40%.)
Please add if possible some calculation comments + conclusion.
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This solution would explain the calculation of break even.