BREAKEVEN POINT APPLICATION

Sanita Corp. produces and sells various kinds of napkins in the domestic market. Fixed costs of the business for a period like depreciations, management salaries, factory insurances are valued $$4\mathrm{.}800\mathrm{.}000$ in total. Variable costs of a dozen of napkins are as seen below:

Direct material $,8\frac{\text{\$}}{D}z$

Direct Labor $,5\frac{\text{\$}}{D}z$

Factory Overheads $3\frac{S}{D}z$

Sale price of a dozen of napkins is determined as $28\frac{\text{\$}}{D}z.$

Questions:

How many pieces and for how much the business has to sell napkins in order to cover the fixed costs,

Draw the graphic of the breakeven point sales and comment with the previous question results,

Compute the quantity of napkins to sell in order to get a profit of $$3\mathrm{.}200\mathrm{.}000$ and what if the total capacity of the business is only $550\mathrm{.}000Dz.$

Compute the Safety Margin and the Safety Margin Ratio when total capacity is sold.

Discuss what can be done to increase the profitability without increasing the capacity.