Read the following dialogue and answer questions 1 to 3 in a suitable format. Ben Numa, Finance Manager, says the following to you. "The Senior Management Team (SMT) has asked for an analysis of the breakeven position of the new Cushy Style range of clothing. We shall be buying in this range from external suppliers, rather than manufacturing it. Our Distribution Centre is currently being expanded to accommodate goods inwards, inventory storage and despatch for this range. I have drawn up a profit-volume chart for the Cushy Style range based on the budget for the first 6 months which I shall send you shortly. Please prepare a briefing paper for the SMT which explains:

1. The multi-product profit-volume chart (Chart 1) and what it indicates about the new clothing range. Please also explain three factors that should be considered when interpreting this chart. [52 marks] CLO2

The SMT has decided to relax the policy on direct selling and to start selling to retailers. A number of retailers are interested including large national chains and small independent retailers. Retailers will expect a credit payment period of at least 30 days. Please include in your briefing paper to the SMT an explanation of:

2. The implications to the business of allowing credit to retailers. [28 marks] CLO3

3. The suitability of us offering prompt payment discounts to the retailers. [20 marks] CLO3

Thank you. Ben then sends you Chart 1