4 The sales director also reports that a European distributor is quite willing to take 100,000 units per annum, provided a reasonable selling price can be agreed. The quality required, however, would involve increased factory variable costs of 12.5¢ per unit, and the company would pay half the distribution costs (estimated to total $30,000 per annum). No sales commission would, however, be payable. What is the minimum price at which the proposal could be accepted? What factors should be taken into account to determine the finally agreed price?

QUESTIONS 1 Calculate the break-even point on the basis of the budgeted figures.