Peter Jones, is looking to set up a new business venture producing Teddy Bears. He has some good contacts in the retail sector and expects to be able to produce and sell 20,000 units per month, for the foreseeable future.

The business plan was based on the following data:
Selling price per unit £35
Variable cost per unit £11
Fixed costs for month £20,000 includes salaries for 2 managers at £5,000 per month each.

Required:

Find the monthly break-even volume and sales value for Peter Jones
Find the margin of safety (volume and value) if the predicted sales volume is 20,000 units per month
Find the Break-even volume if one less manager was employed
Find the volume of units to be sold to make a £15,000 profit per month, assuming fixed costs are £20,000 per month.
Find the revised break-even volume if the fixed costs of £20,000 are reduced by 10% and variable costs are increased by 10%.
Find the revised selling price required to make a monthly profit of £25,000 on sales of 20,000 units.
Identify and discuss the assumptions underlying break-even analysis.