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Bodger Ltd: calculate break-even point, profit levels, net profit and the minimum level of production at which it is better to manufacture rather than buy in stock.

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Bodger Ltd. has been in the business of buying and selling washing machines for some years, but has decided to look at the possiblity of manufacturing its own brand...

(a) Calculate, to the nearest whole number, the break-even point in units and in value for options 2 and 3.

(b)Calculate which of the three options is most profitable at the following levels.

(i) 190 000 units.
(ii) 240 000 units.
(iii) 290 000 units.

(c) Calculate the level in units at which options 2 and 4 show the same net profit.

(d) Calculate the minimum level of production at which it is better to manufacture rather than buy in stock.

(e)Briefly assess each option.
Option 1:
Option 2:
Option 3:

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Solution Summary

The expert calculates the break-even point in units and in value for options. The three options which are most profitable at the levels are determined.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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