Question 2

A company makes three products, A, B and C, and have forecast the following sales and variable costs for September 2019.

Product Sales (MVR) Variable Costs (MVR)

A 1,100,000 450,000

B 750,000 425,000

C 800,000 500,000

Totals 2,650,000 1,450,000

Fixed costs are estimated to be MVR 800,000.

Required:

1. Plot, on graph paper, the marginal income slope for the three products and indicate the average income slope. (15 marks)
2. Read from the graph and, confirm by calculation, the breakeven point. (5 marks)