A small boy plc manufactures and sells a product called mummy. The following reports were extracted from its records: Sales (2500 units @ N40 each): N 1,000,000. Expenses: Direct materials: N 250,000, Direct labour: N 125,000, Variable overhead: N 62,500, Fixed admin expenses: N 180,000, Fixed miscellaneous expenses: N 70,000. Total expenses: N 687,500. Net profit: N 312,500. Required: 1. How many units must be sold before the company can break even? 2. What will be the Net profit if sales increase by 30% assuming no increase in selling price? 3. If selling price is reduced by 5% how many units must be sold in order to maintain a net profit equal to the current profit?

Here are the calculations for the required questions. First, let's extract the necessary information and calculate the per-unit costs and total fixed costs. Given Data: Sales: 25,000 units @ N40 each = N1,000,000 Direct materials = N250,000 Direct labor = N125,000 Variable overhead = N62,500 Fixed Admin expenses = N180,000 Fixed miscellaneous expenses = N70,000 Current Net profit = N312,500 Step 1: Calculate per-unit and total fixed costs. Selling Price per unit (SP): SP = Total SalesNumber of units sold = N1,000,00025,000 units = N40/unit Variable Costs per unit (VC per unit): Direct materials per unit = N250,00025,000 units = N10/unit Direct labor per unit = N125,00025,000 units = N5/unit Variable overhead per unit = N62,50025,000 units = N2.50/unit VC per unit = N10 + N5 + N2.50 = N17.50/unit Total Fixed Costs (FC): FC = Fixed Admin expenses + Fixed miscellaneous expenses FC = N180,000 + N70,000 = N250,000 Contribution Margin per unit (CM per unit): CM per unit = SP - VC per unit = N40 - N17.50 = N22.50/unit --- 1. How many units must be sold before the company can break even? Step 1: Identify the formula for break-even point in units. Break-even point in units = Total Fixed CostsContribution Margin per unit Step 2: Substitute the calculated values into the formula. Break-even point in units = N250,000N22.50/unit Step 3: Calculate the break-even point. Break-even point in units = 11,111.11 units Since units must be whole numbers, we round up to the next whole unit to ensure breaking even. Break-even point in units = 11,112 units The company must sell 11,112 units to break even. --- 2. What will be the Net profit if sales increase by 30% assuming no increase in selling price? Step 1: Calculate the new number of units sold. New units sold = 25,000 units × (1 + 0.30) = 25,000 units × 1.30 = 32,500 units Step 2: Calculate the new total sales revenue. New total sales revenue = 32,500 units × N40/unit = N1,300,000 Step 3: Calculate the new total variable costs. New total variable costs = 32,500 units × N17.50/unit = N568,750 Step 4: Calculate the new total contribution margin. New total contribution margin = N1,300,000 - N568,750 = N731,250 Step 5: Calculate the new Net Profit. New Net Profit = New total contribution margin - Total Fixed Costs New Net Profit = N731,250 - N250,000 = N481,250 The Net profit if sales increase by 30% will be N481,250. --- 3. If selling price is reduced by 5%, how many units must be sold in order to maintain a net profit equal to the current profit? Step 1: Identify the target profit. Target Net Profit = Current Net Profit = N312,500 Step 2: Calculate the new selling price per unit. New SP = N40 × (1 - 0.05) = \