An existing office in Kariakoo currently sells goods for Tshs 100 per unit. The variable cost is Tshs 40 per unit, and 20,000units are sold annually and a profit of Tshs 300,000 is
available annually.
The new option will increase Variable Costs by 30% and Fixed Costs by 20% while sales will increase to 40,000 units per year.
(i) What is the point of a sales price break?
(ii) What will the annual profit be if the sale price is fixed?
(iii) What will the annual profit be in percentage?
(iv) What is the margin of safety?
(v) Calculate the P/V ratio at breakeven point
(vi) What is the % of sales increase in units per year?
(vii) Draw the breakeven diagram for the old option.