Question
Question 3 (Cost-Volume-Profit Analysis / 15 marks) Rainfall Ltd provides a single standard service. The businesss results for the past two months are as follows:
Question 3 (Cost-Volume-Profit Analysis / 15 marks)
Rainfall Ltd provides a single standard service. The businesss results for the past two months are as follows:
April May
Sales (units of the service) 500 620
Sales revenue ($) 25,000 31,000
Operating profit ($) 10,000 14,800
There were no changes, of any description, in selling prices or costs over the two months.
Required:
(a) What is the break-even point for the businesss activities?
(b) What benefit will it be for the management of Rainfall Ltd
(1) To carry out the analysis required in part (a) and
(2) To know the businesss break-even point?
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