Bill and Co make jackets. The selling price is $80.

The jackets take 2 hours to make, labour is $10 an hour. They also require 4 square meters of cloth at $8 per square meter. Fixed costs for the factory are $200,000 per year.

Solve in excel or anywhere you want, then copy-paste your answer to Canvas in text-form.

Required:

1. If they produce 10,000 jackets what will the profit be? (this is the base example)
2. How many pairs do Bill and co have to make to break even? How much is this in dollars?
3. What is the margin of safety in dollars and in percentage? What do you understand by margin of safety?
4. What is the operating leverage ratio of this company? Is that a good leverage?