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15. Rachel Chang Ltd makes hand-woven rugs and sells them for 70 each. To make each rug takes 12 of wool, 32 of direct labour,
15. Rachel Chang Ltd makes hand-woven rugs and sells them for 70 each. To make each rug takes 12 of wool, 32 of direct labour, and 3 of indirect costs. Total annual fixed costs are 20,000. Answer the following three questions. Show your calculations for each answer. rugs (a) The breakeven point in rugs is [3 marks] (b) The number of rugs that must be sold to achieve a profit of 40,000 [2 marks] rugs is (C) If the cost of wool increases by 10% and selling price is increased by 3% the number of rugs to sell to breakeven will be [3 marks] rugs [8 Marks]
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