Question 6 The Sock company buys hiking socks for GHS6 per pair and sells them GHS10. Management budgets monthly fixed costs of GHS12,000 for sales volume between 0 and 12,000 pairs.

Required Consider the following questions separately by using the foregoing information each time. i. Calculate the breakeven point in units. ii. The Sock Company reduces its sales price from GHS10 per pair to GHS8 per pair. Calculate the new breakeven point in units. iii. The Sock Company finds a new supplier for the socks. Variable costs will decrease by GHS1 per pair. Calculate the breakeven point in units. iv. The Sock Company plans to advertise in hiking magazines. The advertising campaign will increase total fixed costs by GHS2,000 per month. Calculate the new breakeven point in units. v. In addition to selling hiking socks, the Sock Company would like to start selling sports socks. The Sock Company expects to sell one pair of hiking socks for every three pairs of sports socks. The Sock Company will buy the sports socks for GHS4 per pair and sell them for GHS8 per pair. Total fixed costs will stay at GHS12,000 per month. Calculate the breakeven point in units for both hiking socks and sports socks.