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Harry's Garden Centre Ltd sells fruit trees at an average price of 28 per tree. The average cost of each tree is 9 while variable
Harry's Garden Centre Ltd sells fruit trees at an average price of 28 per tree. The average cost of each tree is 9 while variable labour costs in storing and maintaining each tree is 3 per tree, and fixed overheads for the year relating to the tree sales department are budgeted at 40,000. Required: a) Calculate the breakeven point in units and value for the business. b) How many units will need to be sold in order to produce a profit of 20,000 ? c) What is the percentage margin of safety if 3,750 units are sold? d) If the company offers to supply planting materials and stakes at a rate of 10 per tree and which will have associated variable costs of 5 per tree and will add 6,000 to annual fixed costs, what will be the new breakeven where just 25% of the customers avail of the service? e) Should this extra service be introduced? Give reasons
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