and sales value using the December 2019 data b. Calculate the margin of safety in units and as a percentage using the December 2019 data c. Calculate the new figures after the changes from Jan 2020 and re-calculate a and b above
BREAK-EVEN ANALYSIS QUESTION
One of Tuskys Supermarket suppliers manufactures a single machine component. The Supplier’s costs and sales for the year ended 31/12/2019 were as follows:
Units sold 42,000
Selling price £80
Variable cost per unit £60
Total fixed cost £374,000
As part of a continuous improvement process. The Supplier is expecting the following changes to take place from 01/01/2020:
Units to be sold 45,000
Selling price per unit is to be maintained at £80
The variable cost per unit is to be reduced by 5%
Total fixed cost are to be increased by £40,000
Required;
a. Calculate break-even point in units and sales value using the December 2019 data
b. Calculate the margin of safety in units and as a percentage using the December 2019 data
c. Calculate the new figures after the changes from Jan 2020 and re-calculate a and b above
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