May I ask how do you get the solutions below ? The Options Option A Development cost £2.1 million Option B Development cost £1.5 million Profit per 1,000 option A sold £30 option B sold £25 Profit for £100 million sales (net of development costs) Option A £0.9 million ( May I know how do you get this figure? ) Option B £1.0 million ( May I know how do you get this figure? ) Break-even sales level Option A £70 million ( May I know how do you get this figure? ) Option B £60 million ( May I know how do you get this figure? )
Hi Robert, The profit for £100m sales (net of development costs) for option A = £30 of profit per £1,000 sold x (100m/1,000) minus development costs of £2.1m = £0.9m (similar approach for option B) Break-even sales level = number of sales needed to make a profit of zero £30 of profit per £1,000 sold x (70m/1,000) minus development costs of £2.1m = 0 (similar approach for option B) Hope helpful, Michael
