Aero Ltd manufactures and sells a range of outdoor activities and camping equipment. The company has recently produced and marketed a new product called EcoTent. The plant’s production capacity is 8,000 units on a monthly basis. Manufacturing variable costs (manufacturing and selling) amount to £12.50 per unit. EcoTent related fixed costs would total £65,000 per month. Predicted monthly demand for EcoTent is expected to exceed 8,000 units. Additional plant space would need to be rented. This would incur a fixed cost of £2,200 on a monthly basis. Variable costs of £14 per unit for the production of EcoTent would be incurred in the rented plant facility. Aero Ltd plans to sell EcoTent at £20 per unit. Calculate the break-even point (monthly) for EcoTent production in units and in sales revenue(£). The company is considering targeting a monthly profit of £25,000. Calculate the number of EcoTent units required to be sold on a monthly basis to achieve this target.

Neptune Company has developed a small inflatable toy that it is anxious to introduce to its customers. The company's Marketing Department estimates that demand for the new toy will range between 15,000 units and 35,000 units per month. The new toy will sell for $3 per unit. Enough capacity exists in the company's plant to produce 18,000 units of the toy each month. Variable expenses to manufacture and sell one unit would be $1.00, and incremental fixed expenses associated with the toy would total $22,000 per month. Neptune has also identified an outside supplier who could produce the toy for a price of $1.75 per unit plus a fixed fee of $15,000 per month for any production volume up to 20,000 units. For a production volume between 20,001 and 40,000 units the fixed fee would increase to a total of $30,000 per month. Required: 1. Calculate the break-even point in unit sales assuming that Neptune does not hire the outside supplier. 2. How much profit will Neptune earn assuming: a. It…

Limpopo Limited plans to manufacture a new energy efficient outdoor light and the following information is available: The estimated sales for the year 2024 are 5000 units at R30 each. The estimated costs for the 2024 year comprise of direct materials and direct labour of R9 and R2 per unit respectively. Fixed factory overheads are R20 000 per annum, fixed administrative expenses are R23 000 per annum and selling expenses are calculated at 20% of selling price per unit. Required: 1.1 Calculate the breakeven quantity (round off to nearest unit) 1.2 Calculate the breakeven value 1.3 Calculate the breakeven value using the marginal income ratio. 1.4 Calculate the selling price per unit if the profit per unit is R2 using the sales quantity of 5000 units provided in the information above. 1.5 Calculate the new breakeven quantity and value if the selling price is decreased by 10% (round off to the nearest unit)

Madetaylor Inc. manufactures financial calculators.  The company is deciding whether to introduce a new calculator.  This calculator will sell for $130.  The company feels that sales will be 18,000, 22,000, 24,000, 22,000, and 18,000 units annually for the next five years.  Variable costs will be 21% of sales, and fixed costs are $500,000 annually.  The firm hired a marketing team to analyze the product's viability, and the marketing analysis cost $1,250,000.  The company plans to manufacture and store the calculators in a vacant warehouse.  Based on a recent appraisal, the warehouse and the property are worth $2.5 million after tax.  If the company does not sell the property today, it will sell it five years from today at the currently appraised value.  This project will require an injection of net working capital at the onset of the project, $250,000.  The firm recovers the net working capital at the end of the project.  The firm must purchase equipment for $5,000,000 to produce the…