Question
Jonathan, operations manager of Milton Keynes farms limited (MKF Ltd.) lacks strong insight in any realistic business decision making. However, he has been able to
Jonathan, operations manager of Milton Keynes farms limited (MKF Ltd.) lacks strong insight in any realistic business decision making. However, he has been able to use the cost diagram below to illustrate and influence costing decisions in the company, MKF Ltd: According to Jonathan, his budgeted annual output is 180,000 units, fixed cost amount to 60,000, variable costs is 0.75 per unit and the sales price is 2.00 per unit. Required: a) Develop a mathematical model using the cost information above. b). Calculate the profit or loss of MKF Ltd. using the above information. Draw a graph with a spreadsheet, for a five-year projection from January 2022 taking into consideration an annual expected increase of 8% in variable cost and 5% increase in both output and sales price (NB. The changes must take effect from 2022). d) Critically analyse and comment on the costing and revenue behaviour before and after your projections.
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