Reference no: EM132794207

CoolRoom Limited manufactures a portable room cooler which is sold to retailers at a cost of £280 per cooler. The factory has been operating at 75% capacity for a number of years. The costs for this output level are as follows:

£

Direct Material per cooler          65

Direct Labour per cooler           30

Manufacturing overhead (per annum)

Fixed         80,000

Variable     40,000

Selling and Distribution Overhead (per annum)

Fixed        21,000

Variable    20,000

Last year, because of the mild summer, the company only operated at 60% of its capacity. The sales revenue achieved last year was £224,000.

Required:

Problem (a) Calculate the break-even point for the company in terms of (i) the number of coolers and (ii) total sales.

Problem (b) Calculate the profit or loss reported at (i) 75% capacity output and (ii) 60% capacity output.