[Question 2]

A company makes a single product with a total capacity of 400 000 litres per annum. Cost and sales data are as follows:

Selling price$1 per litre

Marginal cost$0.50 per litre

Fixed costs$100 000

Draw a traditional breakeven chart showing the likely profit at the expected production level of 300 000 litres

Z-Boxes sell for 299 and their variable production cost is 99.

The research and

development, and fixed production overheads for the year are 1.2 million.

1. Calculate the break-even level of sales volume and revenue?
2. Calculate the break-even revenue using C/S ratio?
3. The budget revenue is 2.99 million; calculate the margin of safety in units and as a percentage?
4. Produce a break-even chart and profit-volume chart using the information above?
5. How many Z-Boxes must be sold to achieve 500,000 profit