Matthew, operations manager of Kilburn farms limited (KF 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, KB Ltd:

According to Matthew, his budgeted annual output is 200,000 units, fixed cost amount to 100,000, variable costs is 0.90 per unit and the sales price is 3.00 per unit.