A company makes a single product with a sales price sh10 and a marginal cost of sh6. Fixed costs are sh60,000 per annum.

a) Number of units to break even

b) Sales at break-eve point

c) C/S ratio

d) What number of units will need to be sold to achieve a profit of sh20,000 p.a.?

e) What level of sales will achieve a profit of sh20,000 p.a.?

f) As (d) with a 40% tax rate.

g) Because of increasing costs the marginal cost is expected to rise to £6.50 per unit and fixed costs to sh70,000 p.a. If the selling price cannot be increased what will be the number of units required to maintain a profit of £20,000 p.a. (ignore tax)?

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