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Pinches Ltd makes cooking oil which sells at £20 a bottle. Variable costs are £12 a bottle. The business is working at full capacity. What is the minimum price at which this product could be sold without making a loss for an order of 12,000 bottles? To fulfil this additional order, the company would incur additional fixed costs of £50,000 and variable costs of £70,000. You may assume a linear relationship between costs and selling price. A. 240,000 B. 120,000 C. 96,000 D. 216,000

Pinches Ltd makes cooking oil which sells at £20 a bottle. Variable costs are £12 a bottle. The business is working at full capacity. What is the minimum price at which this product could be sold without making a loss for an order of 12,000 bottles? To fulfil this additional order, the company would incur additional fixed costs of £50,000 and variable costs of £70,000. You may assume a linear relationship between costs and selling price. A. 240,000 B. 120,000 C. 96,000 D. 216,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pinches Ltd makes cooking oil which sells at £20 a bottle. Variable costs are £12 a bottle. The business is working at full capacity. What is the minimum price at which this product could be sold without making a loss for an order of 12,000 bottles? To fulfil this additional order, the company would incur additional fixed costs of £50,000 and variable costs of £70,000. You may assume a linear relationship between costs and selling price. A. 240,000 B. 120,000 C. 96,000 D. 216,000
Transcribed Image Text:Pinches Ltd makes cooking oil which sells at £20 a bottle. Variable costs are £12 a bottle. The business is working at full capacity. What is the minimum price at which this product could be sold without making a loss for an order of 12,000 bottles? To fulfil this additional order, the company would incur additional fixed costs of £50,000 and variable costs of £70,000. You may assume a linear relationship between costs and selling price. A. 240,000 B. 120,000 C. 96,000 D. 216,000
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