1 answer

Question 2 A company makes three products, A, B and C, and have forecast the following...

Question:

Question 2

A company makes three products, A, B and C, and have forecast the following sales and variable costs for September 2019.

Product                                             Sales (MVR)                         Variable Costs (MVR)       

A                                                         1,100,000                              450,000

B                                                         750,000                                  425,000

C                                                         800,000                                  500,000

Totals                                                2,650,000                              1,450,000

Fixed costs are estimated to be MVR 800,000.

Required:

  1. Plot, on graph paper, the marginal income slope for the three products and indicate the average income slope. (15 marks)
  2. Read from the graph and, confirm by calculation, the breakeven point. (5 marks)

Answers

ANSWER 1

More information is required to answer the first question, I will require actual units sold for each product to determine a curve. For the calculation of answer 2 I have assumed 100 units sold for each products, can't do this in answer 1 as the curve will be straight and it is incorrect in case of marginal income.

Please post full question in the comments section

ANSWER 2

Product Units Sales Variable Cost Marginal Income Break even Units
A 100 1100000 450000 650000 123
B 100 750000 425000 325000 246
C 100 800000 500000 300000 267
Contribution 1275000
Fixed Cost 800000
Income 475000
.

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