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Fitzwarren and Hamid Limited manufactures a standard model of garden gate. The selling price of a gate is £95. Variable costs of manufacture are £38. During the 20X5 financial year, the company expects to incur fixed production costs of £60 000 and fixed selling and administration overheads of £22 000.
Problem 1: How many garden gates will the company have to sell in order to break even (to nearest whole unit)?
a. 1439
b. 2158
c. 863
d. 1053
Assume that present sales will not be affected. Should the order be accepted from a financial point of view (i.e., is it profitable)?
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