COST-VOLUME ANALYSIS (10 marks)

A large hardware store sells a wide range of tools and building materials. You have been asked by the store's owners to calculate the likely volume of sales necessary to reach breakeven point across four key product lines from their product range. The following table summarises the information you have been able to put together so far.

Product	Selling Price per Unit	Variable Cost per Unit	Weekly Expected Sales (Units)
Saws	$49.00	$5.88	60
Screwdrivers	$65.00	$7.80	100
Drills	$55.00	$6.60	70
Hammers	$38.00	$4.56	80

You have calculated your monthly fixed costs for the hardware store as follows: rent ($10 000) and utilities ($6 000). Labour costs are estimated to be $15 000 per month. Even if the store does not sell any products at all, the sore's labour costs will still be $15 000, so you decide to also treat this as a fixed cost in your calculation. The store operates 12 months (48 weeks) per year, and 5 days per week).

1. What is the total breakeven point in dollars-per-month for all four key product lines combined? [Marks: 4]

2. How many units of EACH of the store's two lowest-selling (in 'units') products lines ('saws' and 'drills') could be expected to sell each day at breakeven point? [Marks: 4]

3. If the store's owners decided to operate the business seven days per week, calculate how that would change the number of daily units of 'saws', and of 'drills' the store would need to sell to break even. [Marks: 2]