DM Foods Ltd has set up a subsidiary business selling gourmet food boxes. The fixed costs are £3000 and the variable costs per gourmet food box are £5. Each gourmet food box sells for £25.
- You need to calculate the contribution per unit and the break event point.
- Now plot the figures on a break-even chart and label the break-even point. The vertical axis can go up to 5500 and the horizontal axis can go up to 300.
- What would DM Foods Ltd’s margin of safety be if they actually sold 250 boxes? What does this mean for the business?
- If DM Foods Ltd were to increase the price of the gourmet food boxes to £35 per box, what would the break-even point be?
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