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Ecoserve Solar Systems manufactures and sells solar water heaters. Variable costs per unit are $3,000. Annual fixed costs amount to $900,000. Water heaters are sold
Ecoserve Solar Systems manufactures and sells solar water heaters. Variable costs per unit are $3,000. Annual fixed costs amount to $900,000. Water heaters are sold for $4,500 each. The annual capacity of the factory is 4,500 water heaters. A. Using Excel software, prepare a breakeven chart. (10 marks) B. Use this chart to identify and then state the following: i. The breakeven point in revenue and in units. (2 marks) ii. The profit or loss if 1,500 water heaters are manufactured and sold. (2marks) iii. The profit or loss if revenue is $4,050,000. (2 marks) iv. The margin of safety if 4,000 water heaters are manufactured and sold. (2 marks) C. Ecoserve expects that fixed cost will increase by 5% and variable cost will decrease by $50 per unit. Using the formula method, compute what revenue would be required to earn a profit of $1,250,000? (7 marks)
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