Toowomba manufactures various products and uses CVP analysis to establish the minimum level of production to ensure profitability.
Fixed costs of £50 000 have been allocated to a specific product but are expected to increase to £100 000 once production exceeds 30 000 units, as a new factory will need to be rented in order to produce the extra units. Variable costs per unit are stable at £5 per unit over all levels of activity. Revenue from this product will be £7.50 per unit.

Required:
(a) Formulate the equations for the total cost at:
(i) Less than or equal to 30 000 units;
(ii) More than 30 000 units.
(b) Prepare a break-even chart and clearly identify the break- even point or points.
(c) Discuss the implications of the results from your graph in (b) with regard to Toowomba’s production plans.