Question

Sibon plc manufactures soft toys for the European market. The costs incurred by the firm are as follows:

$
Materials (per toy)
5
Wages (per toy)
4
Packaging (per toy)
3
Rent of premises
5,000
Machinery hire
3,000
Marketing and administration
1,000


The soft toys sell for an average price of $16. Current capacity of Sibon plc is 3000 toys per year.
Required
1. Calculate the following:
1. Contribution per toy sold
2. Break-even in units of output
3. Break-even level of sales revenue
2. Construct a break-even chart showing the break-even level of output and margin of safety.

Answer 1

Answer:

Sibon plc manufactures soft toys for the European market. The costs incurred by the firm are as follows:

$

Materials (per toy)

5

Wages (per toy)

4

Packaging (per toy)

3

Rent of premises

5,000

Machinery hire

3,000

Marketing and administration

1,000

The soft toys sell for an average price of $16. Current capacity of Sibon plc is 3000 toys per year.

Required

1. Calculate the following:

1. Contribution per toy sold

2. Break-even in units of output

3. Break-even level of sales revenue

2. Construct a break-even chart showing the break-even level of output and margin of safety.

Answer 2

Answer:

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Explanation:

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