Andreea Ltd. manufactures t-shirts, which sell at £15 each. Table  shows the sales and total costs for the period July 2020 to December 2020. Monthly fixed costs have been the same each month and it is expected they will remain constant for the remainder of the financial year (up to and including March 2021). 

With reference to Table  and using the high-low method, estimate the variable cost per t-shirt produced and sold. Show calculations. 

Using the high-low method, estimate the monthly fixed cost. Show calculations. 

 Using the information in (1) and (2) above, how many t-shirts should Andreea Ltd. produce and sell in January 2021 to break even? Show  calculations. 

 How many t-shirts does the company need to produce and sell to achieve a profit target of £200,000 in January 2021? Show calculations.

  What is the margin of safety for January 2021, assuming the profit target for that month has been achieved? Show  calculations.

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Table 5 - Sales Volume and Total Costs Sales (Units) 15,502 16,000 14,320 20,100 25,806 36,000 Total Costs 205,020 210,400 193,200 251,000 308,060 410,000 Month July August September October November December Table 5 - Sales Volume and Total Costs Sales (Units) 15,502 16,000 14,320 20,100 25,806 36,000 Total Costs 205,020 210,400 193,200 251,000 308,060 410,000 Month July August September October November December

Answer rating: 100% (QA)

Answer Explanation QUESTION 1 VARIABLE COST 10 PER UNIT QUESTION 2 FIXED COST PER MONTH 50000 QUESTION 3 BREAKEVEN POINT 10000 UNITS QUESTION 4 DESIRE... View the full answer