Requirement: a) Draw a break-even chart for the new product’s first month of trading. Ensure you name the lines you have drawn. b) Calculate the sales revenue (OMR) and number of units of the new product which must be sold in its first year of trading, in order to earn a profit for the year of OMR5, 000. Ignore tax in this situation.
Nizwa Telecom. LLC which manufactures mobile phones, is currently developing a new product. The following estimated data applies to the first month of production:
Selling price per unit OMR 300
Direct material per unit OMR 100
Direct labour per unit OMR 50
Variable production overhead per unit OMR 50
Fixed production overhead per month OMR 8,000
Maximum sales volume (units) per month 100
Requirement:
a) Draw a break-even chart for the new product’s first month of trading. Ensure you name the lines you have drawn.
b) Calculate the sales revenue (OMR) and number of units of the new product which must be sold in its first year of trading, in order to earn a profit for the year of OMR5, 000. Ignore tax in this situation.
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