CVP Analysis and Break Even
You work as a Manager for Happy Kids Ltd, a company that manufactures toys, infant products and electronic games. These products are sold through sub-contracted Sales Agents, who currently earn a commission of 17% on sales. The following is the most recent set of Management Accounts you have received from the Accountant: INCOME STATEMENT for the year ended 30 June 2016 Sales $ 36,000,000 Cost of goods sold $ 17,910,000 Variable $ 12,300,000 Fixed $ 5,610,000 GROSS PROFIT $ 18,090,000 Selling and admin costs $ 10,245,000 Variable sales commissions $ 6,120,000 Fixed advertising costs $ 900,000 Fixed admin costs $ 3,225,000 OPERATING INCOME $ 7,845,000 Fixed interest expenses $ 1,200,000 PROFIT BEFORE TAX $ 6,645,000 Income tax $ 1,777,500 NET PROFIT…
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