Cottage Industries Ltd expects to sell 500 baskets a month. The business has the opportunity to rent a basket-making machine. Doing so would increase the total fixed cost of operating the workshop for a month to £3,000. Using the machine would reduce the labour time to half an hour per basket. The basket makers would still be paid £10 an hour.

(a) How much profit would the business make each month from selling baskets:

(b) What is the BEP if the machine is rented?

(c) What do you notice about the figures that you calculate?

Transcribed Image Text:

without the machine; and with the machine?