Question: Abro Ltd sells its products for $55each.The variable costs for each product are $25 labour & $10 materials. Fixed costs are $80,000 each month. 1.

Abro Ltd sells its products for $55each.The variable costs for each product are $25 labour & $10 materials. Fixed costs are $80,000 each month.

1. Calculate the monthly sales volume to break even.

2. To increase its market share Abro decided to reduce the selling price by $5 and at the

same time purchase additional manufacturing equipment which will reduce the direct labour component of the variable cost by $7 per unit. The new equipment will add $22,000 depreciation to monthly fixed costs. After those changes are made, calculate the number of units to be sold to make a profit of $13,000 per month.

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