Exam Practice questions A new pharmaceutical company is expected to launch a new type of a drug named ZeeTon which would have a shelf life of one year. The company is expected to produce and sell 15,000 boxes of pharmaceutical company when launching their new product - Zee Ton. 25 BREAK EVEN ANALYSIS 2. Break Even Analysis Question 1 metrom in its first year from launch. The initial cost calculations showed that the variable cost of Zee Ton would be $40 per box, fixed cost would be $800,000 and the selling price per box would be $100 Required: a) Briefly explain why the concept of "Breakeven Analysis" would be useful for the (5 marks) b) Calculate the number of boxes from ZeeTon that should be sold in its first year from launch for the pharmaceutical company to cover their costs. [3 marks] c) Calculate the margin of safety in units, in value and as a percentage of the budgeted sales [3 marks] d) Draw a sketch of a breakeven graph. [3 marks) e) Government is expected to impose a price ceiling for ZeeTon at $85 per box. Briefly explain using calculations, the impact of this government regulation on the pharmaceutical company from a breakeven analysis view. [6 marks) volume Question 2 a) State THREE (03) benefits of breakeven analysis. [6 marl- b) Olive Company plans to sell 60,000 units of a product, amounting to sales of $1,800,000 2018. Costs and expenses expected are shown below for 2018. Variable ($) Fixed ($)