Break-even analysis：練習問題

Which of the following is the correct formula to calculate the margin of safety in units?

A firm currently produces \(5,000\) units. The break-even point is \(3,500\) units. Calculate the margin of safety as a percentage of current sales.

Explain the term angle of incidence as used in a graphical representation of break-even analysis.

On a break-even chart, the total cost line and sales revenue line are plotted. Describe the visual area that represents total contribution at any level of output.

A company manufactures a single product with a selling price of \(\$50\) per unit. The variable costs are \(\$30\) per unit and total fixed costs amount to \(\$40,000\) per annum.

Required:
a) Calculate the break-even point in units.
b) Calculate the margin of safety in units if the company expects to sell \(2,500\) units.

The following information relates to a business that produces a specialized component:
Current Sales: \(8,000\) units at \(\$25\) per unit.
Fixed Costs: \(\$60,000\).
Variable Costs: \(\$15\) per unit.

The management is considering reducing the selling price to \(\$22\) to increase sales volume by \(25\%\). This change would also increase fixed costs by \(\$5,000\) due to additional advertising.

Required:
a) Calculate the current break-even point in units and sales value.
b) Calculate the revised break-even point in units if the proposed changes are implemented.
c) Advise management whether they should proceed with the price reduction based on the change in total profit.