QUESTION TWO

Midundo Kabambe, a manufacturer of electronic equipment, decided to analyze me profitability of its new portable Compact Disc (CD) players

On the CD player line.

the company incurred T2S. 2,520,000,000 of foed costs per month while obtaining total revenue of TZS 6,000,000,000 from selling 20.000 units,

The vanable cost

was TZS. 120, 000 per unit.

Recently, a new machine used in production of CD players has become avalable. is more efficient than the machine currently being used. The new machine would reduce the company's variable cost by 20%, but leasing it would increase the tied costs by TZS 96,000,000 per month.

Required:

a) Compute the Break-even point in units assuming the use of the oid machne

(2 Marks)

b) Compute the Break-even point in units assuming the use of the rew machine.

(2 Maric)