Motormusic Ltd makes a standard model of car radio, which it sells to car manufacturers for £60 each. Next year the business plans to make and sell 20,000 radios. The business’s costs are as follows:

Required:

(a) Calculate the BEP for next year, expressed both in quantity of radios and sales value.

(b) Calculate the margin of safety for next year, expressed both in quantity of radios and sales value. E-1

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Manufacturing Variable materials Variable labour Other variable costs Fixed cost Administration and selling Variable Fixed 20 per radio 14 per radio 12 per radio 80,000 per year 3 per radio 60,000 per year