3) Over the coming year, a small manufacturing business has projected its sales and costs to be as follows: Units sold =

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3 Over The Coming Year A Small Manufacturing Business Has Projected Its Sales And Costs To Be As Follows Units Sold 1 (79.15 KiB) Viewed 8 times

3) Over the coming year, a small manufacturing business has projected its sales and costs to be as follows: Units sold = 5,000 Total sales revenue = £500,000 Total fixed costs = £100,000 Total variable costs = £120,000 a) Determine the following: i) Total profit over the period ii) Marginal profit per unit iii) Number of unit sales required to break-even. [4] b) A risk analysis carried out for the company indicates that two scenarios may occur during the year which could affect company sales. Firstly, a new competitor has entered the sector leading to a possible decrease in sales by 5%. Secondly, raw material costs could increase by 15 %. Perform the cost analysis for these two scenarios to determine the effect on total profit. Calculate the percentage change in the profit for both scenarios and consider what actions the management could take to minimise the risk. [6]