A processing centre has the capacity to assemble 500,000 units per year. At present it is operating at 75% of capacity. The annual income is $500,000. The annual fixed cost is $125,000 and the variable cost $0.50 per unit assembled.
i) What is the annual profit or loss of the centre?
ii) At what volume of output does the centre break even?
iii) What will be the profit or loss at 70%, 80% and 90% of capacity on the basis of constant income per unit and constant variable cost per unit?