A garage operates a vehicle repair service. Space is limited and, although the garage is usually...

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A garage operates a vehicle repair service. Space is limited and, although the garage is usually busy, the owner is concerned about the amount of profit that can be generated. Summarised data concerning vehicle repairs is as follows: Average number of repairs per period Average variable cost of each repair Average sales value of each repair 85 K12,600 K21,000 The owner is considering extending the garage opening hours. This would result in an increase in fixed costs from K697,200 to K772,800 per period. The average variable cost and the average sales value of each repair would be expected to remain the same. Required: (a) For the current situation, calculate per period the: (i) profit; (ii) break-even sales revenue. (b) For the proposed extended opening hours, calculate the average number of repairs required per period to achieve the current level of profit. A garage operates a vehicle repair service. Space is limited and, although the garage is usually busy, the owner is concerned about the amount of profit that can be generated. Summarised data concerning vehicle repairs is as follows: Average number of repairs per period Average variable cost of each repair Average sales value of each repair 85 K12,600 K21,000 The owner is considering extending the garage opening hours. This would result in an increase in fixed costs from K697,200 to K772,800 per period. The average variable cost and the average sales value of each repair would be expected to remain the same. Required: (a) For the current situation, calculate per period the: (i) profit; (ii) break-even sales revenue. (b) For the proposed extended opening hours, calculate the average number of repairs required per period to achieve the current level of profit.

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