Aero Ltd manufactures and sells a range of outdoor activities and camping equipment. The company has recently produced and marketed a new product called EcoTent. The plant’s production capacity is 8,000 units on a monthly basis. Manufacturing variable costs (manufacturing and selling) amount to £12.50 per unit. EcoTent related fixed costs would total £65,000 per month. Predicted monthly demand for EcoTent is expected to exceed 8,000 units. Additional plant space would need to be rented. This would incur a fixed cost of £2,200 on a monthly basis. Variable costs of £14 per unit for the production of EcoTent would be incurred in the rented plant facility. Aero Ltd plans to sell EcoTent at £20 per unit. Calculate the break-even point (monthly) for EcoTent production in units and in sales revenue(£). The company is considering targeting a monthly profit of £25,000. Calculate the number of EcoTent units required to be sold on a monthly basis to achieve this target.
Aero Ltd manufactures and sells a range of outdoor activities and camping equipment. The company has recently produced and marketed a new product called EcoTent. The plant’s production capacity is 8,000 units on a monthly basis. Manufacturing variable costs (manufacturing and selling) amount to £12.50 per unit. EcoTent related fixed costs would total £65,000 per month. Predicted monthly demand for EcoTent is expected to exceed 8,000 units. Additional plant space would need to be rented. This would incur a fixed cost of £2,200 on a monthly basis. Variable costs of £14 per unit for the production of EcoTent would be incurred in the rented plant facility. Aero Ltd plans to sell EcoTent at £20 per unit. Calculate the break-even point (monthly) for EcoTent production in units and in sales revenue(£). The company is considering targeting a monthly profit of £25,000. Calculate the number of EcoTent units required to be sold on a monthly basis to achieve this target.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Aero Ltd manufactures and sells a range of outdoor activities and camping equipment. The company has recently produced and marketed a new product called EcoTent. The plant’s production capacity is 8,000 units on a monthly basis.
Predicted monthly demand for EcoTent is expected to exceed 8,000 units. Additional plant space would need to be rented. This would incur a fixed cost of £2,200 on a monthly basis. Variable costs of £14 per unit for the production of EcoTent would be incurred in the rented plant facility.
Aero Ltd plans to sell EcoTent at £20 per unit.
- Calculate the break-even point (monthly) for EcoTent production in units and in sales revenue(£).
- The company is considering targeting a monthly profit of £25,000. Calculate the number of EcoTent units required to be sold on a monthly basis to achieve this target.
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