Question:
The following data are obtained from the record of a factory:
£ £
Sales 4,000 units @ £25 each 100,000
Materials consumed 40,000
Labour charges 20,000
Variable overheads 10,000
Fixed overheads 18,000 88,000
Net Profit 12,000
Calculate:
(i) The number of units by selling which the company will neither lose nor gain anything.
(ii) The sales needed to earn a profit of 20% on sales.
(iii) The extra units which should be sold to obtain the present profit if it is proposed to reduce the selling price by 20% and 25%.
(iv) The selling price to be fixed to bring down its break-even point to 544 units under present conditions.