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Calculate breakeven point in both units and sales revenue

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(a) Lorna Limited manufactures and sells T-shirts. The selling price of each item is $25. The variable costs are $10 for each item and the total fixed costs are $450,000. Calculate the breakeven point in both units and sales revenue, using the contribution margin approach. Show all workings.

(b) (i) Calculate how many extra units above the breakeven point Lorna Limited will need to sell to make a profit of $150,000. Show all workings.

(ii) Prepare CVP Statement of Profit or Loss to show the profit will be $150,000 based on the number of units calculated in (i).

Reference no: EM132987913

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