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Read the case study information below and answer the questions that follow.
BREAK - EVEN CHARTS
The following data relate to a single product business:
Direct labor per unit $12
Direct materials per unit $18
Variable overheads per unit $5
Fixed costs $200 000
Selling price $45
Maximum capacity of the factory is 30 000 units
Questions
1. Construct a break even chart using these data.
2. Identify the break even point and the break even level of output
3. Identify from the graph the profit expected at maximum capacity
4.Calculate the margin of safety at an output level of 25 000 units.
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