A company is budgeting to sell 230,000 units of its product next year at a price of £15 per unit. Fixed costs will be £1,400,000 with variable costs of £8. What is the break- even revenue and margin of safety in the budget?

Managing Organisational Performance

1. Paddington plc manufactures advanced cordless saws in a single factory. Each saw sells for £200 and the material costs £80 per unit. There is no limit to sales demand. Other production costs are £1,100,000 per year. Each saw requires the use of multiple machines of which, one machine is old and often breaks down. This means only 15,000 saws can be produced per year.The factory is open for 50 weeks of the year and operates 40 hours a week.
What is the throughput accounting ratio for Paddington plc’s factory?

2. Which of the following reasons would the choice of penetration pricing be suitable when establishing the price of a new product?

a. To discourage new entrants to the market
b. To increase the length of the initial stage of life cycle
c. To ensure the product is as profitable as possible
d. To set a price for the product to ensure it has a low elasticity
of demand

3. A company is budgeting to sell 230,000 units of its product next year at a price of £15 per unit. Fixed costs will be £1,400,000 with variable costs of £8. What is the break– even revenue and margin of safety in the budget?