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A company that is planning to sell refrigerators has asked you to produce a break- even analysis on a new business start-up. Taking the information
A company that is planning to sell refrigerators has asked you to produce a break- even analysis on a new business start-up. Taking the information given to you by the owner, produce a report highlighting the impact and importance that changing cost and revenue data would have on the business. Consider the following information: Fixed costs = 15000 JD; Variable cost per unit = 350 JD; Selling price per unit = 550 JD; Maximum sales = 200 units. 1. Using the information above, calculate: a. C. a. The break-even point. b. The income and the total expenditure at the break-even point. The profit or loss when sales = 80 d. The margin of safety when 120 units are sold. (P4) 2. Construct a break- even graph for the company and label the following items: The fixed cost line. b. The total cost line. C. The sales revenue line. d. The profit area and the loss area. e. The margin of safety when 120 units are sold. (P5) 3. Demonstrate to the company the impact of changing cost and revenue data on the break-even point. Use new figures for cost and revenue data to identify new break-even points by creating new graphs OR using the formula. (M2)
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