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?
Set out below are the sales and net profits of a business for two years, 2010 and 2011: 2010 £2011 £Sales revenue530,000730,000Operating profit66,000114,000The fixed costs in 2011 had increased by £16,000 over the previous year but the percentage contribution remained the same. Required: Calculate the sales revenue level at which the business broke even in 2011. Calculate the sales revenue that would have been required to generate an operating profit of £240,000 in 2011. Illustrate your answer to (b) on: a chart displaying the contribution level and the profit level; a profit-volume chart. 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? [Marks XXXXXXXXXX) = 25 marks]
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