TASK 2

DKM Leicester Limited also produces special ergonomic student tables in one of their production hubs located in Manchester. The forecasts for the year 2022 are that fixed costs will be 22,000,000, variable costs per student table will be 600, and sales price will be 770 per Student table. Sales for the year is forecasted at 850.000 Student tables

(A) How many Student tables will have to be produced and sold to break-even in the

Manchester production hub? (6 marks)

(B) Calculate the company's margin of safety as a percentage of sales (8 marks)

(C)The Managing Director of the Manchester production facility has declared that the profit target for the year 2022 is to be 90,000,000. How many Student tables does the facility need to make and sell to achieve that target profit? (8 marks)

(D)The Directors of DKM Leicester Limited were advised by the company's external accountant that for the company to be successful, they have to produce beyond the break even point. However, the directors do not understand what the accountant meant by the term 'Break Even Point'. Provide a brief note for the directors that explains what the 'Break Even Point' means (Maximum 100 words) (8 marks).