Question 2

Smiths plans to manufacture 10,000 units per annum with a variable production cost of 6 per unit. Annual fixed overhead is 100,000.

Required:

1. Calculate the selling price per unit required to achieve a break-even position.

2. Calculate the level of mark-up on variable cost that is required to achieve a break-even position.

3. Calculate the level of mark-up on variable cost that is required to achieve 50,000 profit.