Armidale Corportaion sells Specialised Laptops for $1000 each. Each unit’s variable cost is $500; in addition, the company pays 10% commission on sale to its sales personnel. The company’s ‘fixed costs of manufacturing’ is $12,500 per month, in addition to its total fixed ‘selling and admin’ expenses of $25000.
Required:
- Work out the ‘contribution margin’ per laptop unit for the company.
b. Work out the ‘break even’ point of sales (units) for the company?
c. If the company’s target pretax income is $75000, how many laptop units must it sell?