Question 4. Cost volume profit analysis (15 marks) Multi-Make Ltd manufactures self-assemble radio kits. Each unit sells for $8, and the business has a relevant range of production between 30 000 and 60 000 units per year. The budget for the coming year is as follows: Sales (50,000 units) Less variable costs Manufacturing Direct Material Direct Labour Variable Overhead Total Manufacturing Marketing Advertising salaries Total Variable cost Contribution Margin Less Fixed costs Manufacturing Marketing Total Fixed Cost Profit before tax $87,500 $57,500 $50,000 $195,000 $105,000 $ 45,000 $ 27,000 $400,000 $300,000 $ 72,000 $28,000
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