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QUESTION 5 CVP Analysis 20 marks - 4 for (a), 4 for (b), 4 for (c), 8 for (d). A smart phone manufacturer makes two types of smart phones, Connect32 and Connect64. He has sales staff who sell the phones on commission. The following data are available: Product Sales Price Variable Production Cost Sales Commission Connect32 $600 $100 $20 Connect64 $850 $375 $35 Fixed costs per annum are $120,000. a) Calculate the unit contribution margin for each product. b) This year the manufacturer will specialise in making only Connect32 phones. How many does he need to sell to break even? c) If Connect32 phones are still the only product what is the breakeven sales volume for the year in sales dollars? d) He now decides to manufacture both phones this year in the ratio of 3 Connect64 to 1 Connect32. i. How many of each phone must be sold to earn a profit of $195,000 before tax for the year? ii. How many of each phone must be sold to earn a profit of $140,000 after tax (of 30c in the dollar) for the year?

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