Rumpole Ltd is proposing an expansion of their product range by manufacturing a new product. It is proposed that the new product will sell for £15 per item and will have a market of between 10,000 and 15,000 items per year. An analysis of the costs at these levels of production is:
Units: 10,000 15,000 £ £
Materials 40,000 60,000 Labour 70,000 95,000 Overheads 50,000 55,000

(a) Calculate the variable cost per unit and the total fixed cost.

(b) Calculate how many units of the product must be manufactured to:
(i) break even (ii) earn a profit of £13,000.

(c) Calculate how much profit or loss would be made if only 7,000 units were manufactured and sold.