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Break even analysis

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Angelicus and Co. manufactures three different qualities of lock, Domestic, Commercial and Industrial. The company's results for the year ended 31 March 2003 were as follows.

Domestic Commercial Industrial Total
Sales (units) 120000 45000 56250 221 250

$0 $0 $0 $0
Sales (total value) 240 180 450 870

Total costs
Direct material 108 66 84 258
Direct labour 60 30 150 240
Variable overheads 24 54 120 198
Fixed overheads 54 33 42 129
246 183 396 825

Profit (loss) 6 3 54 45

Fixed overheads are absorbed on the basis of 50% of direct materials.
(a) For the year ended 31 March 2003 calculate, for each type of lock,
(I) the contribution per unit;
(ii) the contribution as a percentage of sales.

(b) Calculate the break-even point for each type of lock in boh units and dollars

(c ) Advise whether Angelicus should cease production of domestic and commercial locks.

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Solution Summary

Performs break even analysis. Finds the contribution per unit, the contribution as a percentage of sales. Calculates the break-even point for each type of lock in both units and dollars.

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