1. A company produces a product and sells 25000 units a month at a selling price of 38. Direct material cost is 12 per unit and direct labour cost is 10 per unit of output. The total fixed cost is 288,000. The factory has a maximum production capacity of 40,000 units. (Must show all calculation for full marks)
2. Calculate the break-even level of output.

1. Calculate the margin of safety ratio?

1. A department makes a product whose contribution per unit is 1,200 and which takes 60 hours of machine times. A component used in this product incurs a marginal cost of 250 (taking 8 hours of machine time). The department is working at full capacity. An external supplier has offered to supply the component at a price of 400 per component. What is your advice to the department? Make the component in house or buy it from the external supplier. Explain your answer. Show all calculations.