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PLC Ltd makes and sells a single product, Product P. It is currently producing 112,000 units per month, and is operating at 80% of full capacity. Total monthly costs at the current level of capacity are £ 611,000. At 100% capacity, total monthly costs would be £ 695,000. Fixed costs would be the same per month at all levels of capacity between 80% and 100%. At the normal selling price for Product P, the contribution/sales ratio is 60%.
Problem 1: Calculate the following:
1. Breakeven Sales Value
2. Sales Volume to achieve Target Profit equal to Fixed Costs.
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