Boutique and Corneo are two competing garment businesses that produces only one type of product. Information about the expected sales volume, price and cost structures of the two businesses are given below: Boutique 1,200 450 Corneo 1,000 480 Budgeted monthly sales Selling price Variable cost per unit Direct material Conversion costs Fixed cost per month 120 260 50,000 100 230 120,000 Assume a tax rate of 28% Required: 1. Calculate the following for Boutique: (a) Break-even in dollars. (3 marks) (b) Target sales volume in units, assuming a target profit of $30,000 after tax. (4 marks) (c) Margin of safety as a percentage. (3 marks) (d) If Boutique's conversion cost increase by 6%, how many units will the company have to sell to reach its break-even point? (3 marks) 2. Calculate the sales volume that will result in Boutique and Corneo having the same operating profit. (5 marks)
