• Sales revenue line drawn and labelled correctly and accurately
• Fixed cost line (at $1,020) labelled and drawn accurately and correctly
• Total costs line (starting at $1,020) drawn and labelled correctly and accurately
• Intersection of the sales revenue line with the total costs line at 600 units
• Clearly showing on the x-axis that the BEQ = 600 hotdogs p/m
b) Rent increases by 50% = 200 * 1.5 = $300
Hence, the revised fixed costs = $300 + $500 + $320 = $1,120
A new fixed cost line should therefore be plotted.
New BEQ is therefore: $1,120 / ($2.5 - $0.8) = 659 hotdogs p/m
This should be clearly shown on the break even chart.
Daily sales increase by 70% = 200 * 0.7 = 140 units sold, i.e. Nicole Harvey sells an extra 30 units more each day (thereby the difference between revenues and costs are greater, i.e. the firm makes more profit).
For maximum marks, the candidate must: show all working out, show the effect of higher costs on the fixed costs for the firm and the subsequent impact on BEQ. There should also be a comment of the change (reduction) in BEQ.