Chiquita, the finance director of Machiq Limited (see previous case studies), had, prior to her mysterious disappearance, produced a break-even chart for the new product (the vanishing potion) that the company was considering making. The information she used was as follows:

Selling price per bottle of vanishing potion £15 Variable costs per bottle £6 Fixed costs relating to the bottling division £20,000 Maximum production was set at 15,000 bottles.

Required

(a) Prepare a break-even chart based on the above information.

(b) Indicate on the chart the break-even point and the areas of profit and loss.

(c) Indicate on the chart the profit or loss if 12,000 bottles were sold.