Pippa runs a photographic studio specializing in black and white portrait photography.

Clients book a one hour studio session and are entitled to receive two large photographs of their choice from the sitting.

The following outgoings are associated with Pippa’s business:

* Pippa rents the photographic studio for £12,000 per annum.

* Pippa employs two full-time photographers, each paid a salary of £22,000 per annum.

* She employs one photographic technician for one day a week. He is paid £120 per day, £6,240 per annum.

* Advertising costs are £550 per annum.

* Electricity costs are £1,100 per annum plus £4 per client hour. Each sitting takes two hours.

* Pippa acts as receptionist and general manager of the business and is paid

£16,000 per annum.

° Fixtures, fittings, and equipment originally cost Pippa £12,800 and will depreciate by £2,560 per annum.
° Pippa expects to have 1,300 sittings per year; each sitting is charged at £80.
REQUIRED:

a) Identify Pippa's fixed costs and calculate the total fixed costs she will incur each year.

b) Comment on the level of fixed costs compared to variable costs and the implications oft his for the business.

c) Calculate the break-even point and the margin of safety for Pippa.