Set out below are the sales and net profits of a business

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Reference no: EM13378157

Set out below are the sales and net profits of a business for two years, 2010 and 2011:

2010

2011

Sales revenue

530,000

730,000

Operating profit

66,000

114,000

The fixed costs in 2011 had increased by £16,000 over the previous year but the percentage contribution remained the same.

Required:

a- Calculate the sales revenue level at which the business broke even in 2011.

b- Calculate the sales revenue that would have been required to generate an operating profit of £240,000 in 2011.

c- Illustrate your answer to (b) on:

1- a chart displaying the contribution level and the profit level;

2- a profit-volume chart.

d- If a new product does not require any new fixed costs because the company utilizes the existing capacity of facilities and personnel, what would be the breakeven point?

Reference no: EM13378157

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