Refer to the data given in Problem 18.33. Now assume that Divine DVDs pays income taxes of 30 percent.
In P 18.33
Divine DVDs Pty Ltd manufactures and sells DVDS. Price and cost data are in the following table.
(In the following requirements, ignore income taxes.)
1. What is Divine DVDs’ break-even point in units?
2. What is the company’s break-even point in sales dollars?
3. How many units would Divine DVDs have to sell n order to earn a profit of $400 000 after tax?
4. What is the firm’s safety margin?
5. If Divine DVDs’ direct labour costs increase by 10 percent, what selling price per unit of product must it charge to maintain the same contribution margin ratio?