Answer to Question #232432 in Economics for MeaK

Question

manufactures one product that currently sells for N$280. This product has the following costs:

Variable costs:

 Material costs – 10 square metres at N$11.40 per square metre

 labour costs – 8 hours at N$6.10 per hour plus 12 hours at N$4.50 per hour

 Royalties – N$15 per product

Fixed costs are N$10,600

You are required to calculate the following:

(a) The contribution (per product) towards the fixed costs of Parklands Ltd.

(b) The number of products that would have to be sold to break even.

(6 marks) (5 marks)

(c) The number of products that would have to be sold to earn Parklands Ltd a profit of

N$10,000. (6 marks)

(d) The profit (or loss) earned if the labour costs are reduced by 10% and the business sells 225 products. (7 marks)

(e) If the fixed costs reduced, would the number of products needed to break even, increase

or decrease?

Answer 1

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