calculate the increase in production and sales that would be required to break even.

A firm manufactures picture frames with a projected selling price of £7.50 per picture frame. The firm has fixed costs of £4,002 per month and variable costs per picture frame are £4.50.

(a) Calculate how many picture frames the firm would have to produce each month in order to break even.

(b) The firm plans to increase its monthly production and sales from 1,500 to 2,000 picture frames. Calculate the firm’s expected increase in monthly profit.

(c) If the firm is making a loss of £402 per month, calculate the increase in production and sales that would be required to break even.

 

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