Answer the following questions.

The variable cost of the electric kettle manufactured by Fair Oak Domestic Appliances Ltd is $$4.$ The company, which sells its kettles direct to retailers for $$10,$ expects its net profit for the year just ended to be $$270,000$ after allowing for fixed costs of $$90,000.$ Annual sales are $60,000$ kettles per year. The productive capacity of the company is under$-$utilized and the marketing manager suggest that a $10$ percent reduction in selling price will bring about a $25$ percent increase in sales.

$($a$)$ Define the term contribution. What is the contribution per unit in this case?

$($b$)$ What level of sales is necessary to break even?

$($c$)$ Calculate the sales revenue at this volume of sales.

$($d$)$ Calculate the sales revenue resulting from implementing the marketing managers proposal.

$($e$)$ As a result of the increased volume, by how much has revenue changed?

$($f$)$ As a result of the increased volume, by how much have costs changed?

$($g$)$ Should Fair Oak reduce their selling price by $10$ percent?

A firm is considering which of the following three prices to charge customers:

A$)$ $$2\mathrm{.}20$

B$)$ $$2\mathrm{.}00$

C$)$ $$1\mathrm{.}70$

The relevant data for decision$-$making is:

Fixed costs $$1\mathrm{.}2$ million

Variable costs $$1\mathrm{.}25$ per unit

Current output $2\mathrm{.}6$ million units

In table format calculate

$($a$)$ Break even output at each price level

$($b$)$ The profit$/$loss at each output level

$($c$)$ Draw a break$-$even chart to represent the data at a price of $$2\mathrm{.}20$ per unit.