Preparation of break-even and profit-volume graphs ZED plc manufactures one standard product, which sells at £10. You are required to:

(a) Prepare from the data given below, a break-even and profit-volume graph showing the results for the six months ending 30 April and to determine:

(i) the fixed costs;

(ii) the variable cost per unit;

(iii) the profit-volume ratio;

(iv) the break-even point;

(v) the margin of safety.

(b) Discuss the limitations of such a graph.

(c) Explain the use of the relevant range in such a graph.
(20 marks)
CIMA Cost Accounting 2

Transcribed Image Text:

Month Sales (units) Profit/(loss) () November 30000 40000 December 35000 60000 January 15000 (20000) February 24000 16000 March 26000 24000 April 18000 (8000)