Calculate the break‐even point for Pearson & Litt for 2019 and 2020.
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Consider the info provided below as well as the financial statements and answer the questions that follow.
Pearson & Litt is a manufacturing company in the Eastern Cape. Their factory manufactures glass wine bottles for the Blue Valley Beer Co.
For 2019 and 2020 respectively :
Sales price per unit R15 and R19
Variable cost per unit R6 and R7
Fixed cost (FC) per annum R650 000 and R 855 500
Fixed cost per unit R3 and R4
Current assets R450 600 and R560 700
Current liabilities R510 000 and R780 000
Retained profit R21 809 and R17 600
Net Sales R2 900 320 and R 3 100 100
Cost of sales R390 000 and R475 000
Q.1 Calculate the break‐even point for Pearson & Litt for 2019 and 2020.
Q.2 Compare the results of the 2019 and 2020 break‐even point and explain why there might be a difference.
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