Pilot Ltd. Manufactures and sells pens. Current sales output is 5 million annually at a selling price of £0.50 per unit. Fixed costs are £900,000 per year. Variable costs are £0.30 per unit.

Required:

a) What is the current operating profit for a year?

b) What is the present break-even point in £?

c) How would your answers in question a) and b) change if there is a 10% increase in the selling price and £20,000 increase in fixed costs