Andrew Ltd

Andrew Ltd produces gumboot and sells it across different states in Australia. The company is consideringexpanding their product market internationally by next year. The CEO, Andrew, believes that an aggressivecampaign is needed next year to maintain the entity’s present growth. The financial year begins in July andends in June. The CFO has presented Ray with the following data for the current year, 2018, for use inpreparing next year’s advertising campaign.Cost SchedulesVariable costsPer Unit ($)Direct labour per pair 12.00Direct materials 8.00Variable overhead 18.00Variable cost per pair 38.00Fixed costsManufacturing $60,300Selling 66,000Administrative 18,600Selling price per pair $50.00Sales, 2018: $700,000Andrew has set the sales target for the year 2019 at a level of $800,000.Required (show all workings):a) What is the contribution margin per unit and ratio for 2018?b) What is the break?even point in units for 2018?c) How many pair of gumboots would have to be sold in 2019 to earn a target profit of$171,600?d) Andrew believes that to attain the sales target in the year 2019 additional selling expensesof $34,000 for advertising will be required, with all other costs remaining constant. Whatwill be the sales in dollar for 2019 if Andrew Ltd. spends the additional advertisingexpenses and expect to earn target profit 140,000 after 30% of income tax rate?

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