Reference no: EM132549726
XYZ Company manufactures a product called "PERMA". Pertinent cost and revenue data relating to the manufacture of this product is given below:
Shs
Selling price per unit 66
Variable production cost per unit 44
Variable selling cost per unit 4
Fixed production cost (total) Shs.200,000
Fixed selling and administrative cost (total) Shs.99,000
Required
Question 1: Calculate the break-even sales level in shillings;
Question 2: Suppose the company desires to make a profit of shs.195,000, what should be the output in units?
Question 3: A new machine, which is more efficient, is installed. This machine increases the fixed production cost by 20% but reduces the variable production cost per unit by 30%. What is the new break-even point in sales revenue?
Question 4: State five limitations of break-even analysis
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