A company manufactures a single product which incurs fixed costs of Ghc$30,000$ per annum. Annual

sales are budgeted to be $70,000$ units at a sales price of Ghc$30$ per unit. Variable costs are Ghc$28\mathrm{.}50$ per

unit.

$($a$)$ Draw a profit$-$volume chart, and use it to determine the breakeven point.

The company is now considering improving the quality of the product and increasing the selling

price to Ghc$35$ per unit. Sales volume will be unaffected, but fixed costs will increase to Ghc $45,000$ per

annum and variable costs to Ghc $33$ per unit.

$($b$)$ Draw, on the same graph as for part $($a$),$ a second profit$-$volume chart and comment on the

results.