Managerial Accounting

Tamim Products sells camping equipment. One of the company’s products, a camp lantern,sells for TK.90 per unit. Variable expenses are TK. 63 per lantern, and fixed expenses associatedwith the lantern total TK. 1, 35,000 per month.

Required: (12)

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A. Compute the company’s break-even point in number of lantern, and in total sales dollars.

B. If the variable expenses per lantern increase as percentage of the selling price will itresult in a higher or a lower break-even point? Why? (Assume that the fixed expenses remainunchanged.)

C. At present, the company is selling 8,000 lanterns per month. The sales manager is convincedthat a 10% reduction in the selling price will result in a 25% increase in the number of lanternssold each month.

Prepare two contribution income statements, one under present operatingconditions and one as operations would appear after the proposed changes. Show both total andper unit data on your statements.A

D. Refer to the data in (C) above. How many lanterns would have to be sold at the new sellingprice to yield a minimum net operating income of TK. 72,000 per month?

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