Question 2:

The Jupiter company manufactures four products A, B, C and D. Information about the products are as follows:

A B C D

Selling price per unit ($)100 80 120 140

Variable cost per unit ($) 60 50 70 90

Expected sales (units) 6,200 10,000 9,000 10,000

The company's fixed costs is expected to be $1,200,000.

Required:

a.Explain briefly Break even analysis and it's uses.(3 marks)

b.Calculate the break even point in units and in value for Jupiter company in total and individually for each product.

(12 marks)

c.Calculate the margin of safety and the margin of safety percentage of Jupiter company. Comment on the margin of safety level of Jupiter company.

(5 marks)