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Brecht Ltd produces a standard product which is sold for 85 each. The business incurred variable costs of 550,000 last year and total costs were
Brecht Ltd produces a standard product which is sold for 85 each. The business incurred variable costs of 550,000 last year and total costs were 850,000. The business sold 11,000 units during the year and was operating at full capacity. The business intends to expand its output. This will involve building a factory extension, which will increase annual fixed costs by 120,000 per year. 1. Calculate the number of products that need to be sold in order for the business to break even, after the new factory extension has been built. 2. Calculate the profit (loss) that would be generated if the business sold 10,000 units (i) before the factory extension is built. (ii) after the factory extension is built
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