Bond SA is planning to manufacture a new product with an initial sales forecast of 3,600 units in the first year at a selling price of ?800 each. The finance department has calculated that the variable cost for each truck will be ?300. The fixed costs for the manufacturing facility for the year are ?1,500,000. Using the information provided by the sales forecast and the finance department it is now possible to calculate the planned profit, the contribution, and the break-even point for this venture by leveraging the nature of fixed and variable costs.

Planned profit Sales revenue 2,880,000 Fixed costs Less variable costs 1,080,000 Planned break-even point Contribution per unit 1,500,000 Contribution 1,800,000 Sales value variable cost 500 Less fixed costs 1,500,000 Break-even point (units) Profit 300,000 Fixed costs/contribution per unit 3,000