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Manufacturer A sells a particular product for £440. Production costs are as follows:
Fixed costs £5,400,000
Variable costs £395 per unit
(a) Calculate the number of units to be produced and sold for break-even.
Manufacturer B sells a similar product. By investing in newer machinery, production costs are as follows:
Fixed costs £7,680,000
Variable costs £300 per unit
This product is sold for £357 per unit.
(b) Calculate the level of production for which the two methods have the same total costs.
(c) Compare the profits of the two manufacturers for production and sales of 200,000 units.
(d) Calculate the level of production and sales for which the two methods produce the same profit or loss.
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