Question 1:

Falcon Company manufactures the camera system of a DRONE assembly. Its manufacturing assembly plant is located at the middle east, and started its operation in the year 2010. The company exported eighty percent of its production to the American and European drone companies. It has at least three competitors producing the same line of product for drone assembly in China, South Korea and India. The CEO or Chief Operating Officer of Falcon company is looking forward on its company strategies to cope up with the stiff competition in the market. Selling price, raw material costs, labor costs, and distribution costs are just some of the items that the CEO are keen of considering for possible financial analysis. He directed his operation manager, purchasing manager, and finance manager for an urgent meeting to discuss this matter. The meeting will be focusing on the strategies to further reduce company's cost of production, and other product related and overhead costs. The company estimated monthly costs and monthly sale revenues for this operation are given in Table Q1. All costs are monthly basis except the company taxes.

To start with the analysis, the officers determine the following

;

((iii) Using a production range from zero to 10,000 units a month, develop the following cost-volume-profit graphical presentations

and explain their significance;

(a) A breakeven chart; ]

(b) A profit-volume graph.

Note:

Quantity, Q = 9,290 Unit

VC = variable cost per period = 1233556 OMR

FC = fixed cost per period = 216084 OMR

Variable cost per unit (vcu )= 132.78 Unit

Selling price per unit (spu)= 320 Unit

TC = total cost = 1449640 OMR

BEP Breakeven point= 1154.19 Unit

Contribution margin = 1739244 OMR

Breakeven sales = 369341.23 OMR

Margin of Safety = 2603458.77 OMR

Net Profit = 1523160 OMR