A company makes and sells a single product. The selling price is £12 per unit. The variable cost of making and selling the product is £9 per unit and fixed costs per month are £240,000. The company budgets to sell 90,000 units of the product a month.

Required

a) What is the budgeted profit per month and what is the breakeven point in sales?

b) What is the margin of safety?

c) What must sales to achieve a company profit of £120,000?

d) Briefly explain the limitations of break-even analysis.