RantauBags Company plans to sell 10,000 handbags at $400 each in the coming year. Data on cost per handbag are as follows: Direct materials $80 Direct labour $125 Variable overhead $15 Variable...

RantauBags Company plans to sell 10,000 handbags at $400 each in the coming
year. Data on cost per handbag are as follows:
Direct materials $80
Direct labour $125
Variable overhead $15
Variable selling expense is a commission of 5 per cent of the sales price. Total fixed
factory overhead amounts to $800,000. Fixed selling and administrative expense
totalled $400,000.
Required:
1) Prepare a contribution margin income statement for RantauBags for the coming
year.
2) What is the effect on RantauBags operating income if 13,000 units are
manufactured and sold next year? Show computation.
3) Calculate the number of units RantauBags must sell to breakeven.
4) Calculate the number of units RantauBags must sell to achieve a target
operating income of $240,000.
5) Calculate the margin of safety in sales ($) for the coming year.
6) Discuss TWO benefits of manager's possessing the knowledge/understanding on
cost-volume-profit analysis.