1. Two of the ready family size meals FarmFresh produces and sells are V (Vegan) and M (Meat).

Budgets prepared for the next six months give the following information:

                                                                                        Ready meal V / unit                 Ready meal M / unit

                                                                                                 £                                                     £

Selling price                                                                         10.00                                             12.00

Variable costs: production and selling                            5.00                                               10.00

Common fixed costs: production and selling for six months £561,600

You are required, in respect of the forthcoming six months :

a) to state what the break-even point in £ will be and the number of each product this figure represents if the two products are sold in the ratio 4V to 3M;

b) to state the break-even point in £s and the number of products this figure represents if the sales mix changes to 4V to 4M (ignore fractions of products);

c) to advise the sales manager which product mix should be better, that in (i) above or that in (ii) above, and why;

d) to advise the sales manager which one of the two products should be concentrated on and the reason(s) for your recommendation; assume that whatever can be made can be sold, that both products go through a processing process and that there are only 32,000 processing hours available, with product V requiring 0.40 hour per unit and product M requiring 0.10 hour per unit. Calculate the resulting profit.