14.20 Fallon Frodsham Ltd manufactures and installs small prefabricated building structures that are sold to people who want to establish a home office using part of their gardens. Each prefabricated building sells at £13,000, including installation costs. The variable costs of manufacture are £7,300 per building. The company’s directors have set a sales target of 150 buildings for the 20X6 accounting year.

Apply the break-even formula to calculate the maximum level of fixed costs that can be incurred before the business makes a loss. Assume that the business reaches its sales target of 150.