Ron owns a business that manufactures kettles at a marginal cost of $18 each. 

The selling price is $22.50 per kettle. 

The fixed costs are currently $90,000 per annum. 

Required

a. Explain the term 'marginal cost' and give an example. 

b. Calculate the total contribution if 25,000 kettles are sold. 

c. Identify the formula used to calculate the profit margin. 

d. Calculate the profit to revenue margin if 25,000 kettles are sold. 

e. Calculate how many kettles will need to be sold to break even if the fixed costs increase next year by 20 per cent.