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Question - City Ltd manufactures backpacks from their London factory. Fixed cost is £60,000 per annum. During 2022, it expects to produce 6000 backpacks. Each backpack sells for £30. Total cost is £200,000 including fixed cost at this level of production.
1. How many Backpacks must be produced to breakeven?
2. What will be the profit or loss if (a) 4500 backpacks are sold (b) 9500 backpacks are sold
3. How many backpacks must be sold to make a profit of £5400
4. Another company called Wembley Ltd has approached City Ltd to manufacture 3700 shoe bags for them as additional special order. City Ltd is considering whether to accept or reject this special order. The bags will have Wembley Ltd Logo on it at a cost of £2 for each bag. Wembley is willing to pay £28 for each bag. No additional resources will be required to fulfil the order from Wembley. Should City Ltd accept or reject the order?
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