Question

Given you are constrained to your house due to Covid-19 you have decided to try and launch your own small business.

Required (200 words):

c.Workout your Breakeven point, showing all calculations.

d.Assume you require a profit of $25,000, calculate your new breakeven point, showing all calculations.

e. Define and calculate the ‘Margin of Safety’, in both units and dollars, assuming you sell 75,000 units. Ensure you include all calculations.

Answer 1

I will start business of running a small restaurant with $2 per plate meal which costs $1 for me. Total fixed cost of setting business is $ 3,000
1	Breakeven point	Fixed Cost Gross Profit	3,000	i.e 3,000 units
2	Profit required is $25,000
	Gross profit per plate	$ 1
	Unit to be sold for profit	25,000	Units
	New Break even point	28,000	Units
3	Margin of safety (Rs.)	Sales- break even sales
		1,44,000	USD
	Margin of safety unit	72,000	Units