Marginal costing and Break$-$even analysis Example

A medium$-$sized construction company in Pretoria specializes in the construction of housing projects. It has acquired land suitable for the construction of $30$ houses and has been approached by a developer who has negotiated the sale of the properties for R$450000$ per house with a contract duration period of $12$ months. Should the company accept the offer?

The marginal costs will be R$200000$ per house and the fixed overheads are R$1500000$ per annum.

$1.$ After what time period will the company start to break even? $($graphically$)$

$2.$ At what percentage level of activity will the company break even? $($graphically$)$

$3.$ What effect would a revised contract period of $2$ years have on the break$-$even point of the company if the sale price remains the same with no increase in$$marginal$$cost$?$