Question
Cottage Industries is a small business producing handmade baskets in rural Yorkshire. The baskets are sold at a price of 12 each and the variable
Cottage Industries is a small business producing handmade baskets in rural Yorkshire. The baskets are sold at a price of 12 each and the variable cost of producing each basket is 10. The fixed costs incurred by Cottage Industries are 400 per month. The break-even volume of production per month is:
a. | 100 units per month | |
b. | 150 units per month | |
c. | 200 units per month | |
d. | 250 units per month |
In Q.1 above, Cottage Industries is planning to produce and sell 400 units. The margin of safety for Cottage Industries is:
a. | 50% | |
b. | 75% | |
c. | 100% | |
d. | 25% |
In Q.1 above, if the price of a basket were to increase to 14, variable costs and fixed costs remaining the same, the break-even volume of production per month will:
a. | increase | |
b. | decrease | |
c. | stay the same | |
d. | may increase or decrease |
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