Question 10Question 3

Sheridan Bucket runs a company, Yummy Green Drinks AB, that specializes in selling healthy drinks at a reasonable price. A six-pack of drinks (25 cl each bottle) is sold for 21 SEK. The supplier charges Yummy Green Drinks 16 SEK for a six-pack. The company pays 2,250 SEK/month to rent its premises. Costs for telephone, postage, advertising etc. is 5,000 SEK per year. Sheridans salary (including social fees), is 218,000 SEK per year.

Required (show all your calculations below and write in your own words):

(a) Calculate the break-even-point, expressed in SEK and Units per year. (2 points)

(b) If the company sells 65,000 units, what is the profit and safety margin (express safety margin in SEK and Units)? (4 points)

(c) "Contribution margin is the excess of sales over fixed costs." Do you agree? Explain. (4 points).