During a visit to Surrey, Jassa gets into conversation with the owner of a local...
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During a visit to Surrey, Jassa gets into conversation with the owner of a local restaurant, Maharaja Catering. The owner of Maharaja tells Jassa he is willing to sell samosas for $1.25 each to Chintu Chaiwala as long as Chintu pays for all shipping and handling costs. The shipping and handling for 100 samosas would be $50. Chintu would like to know whether it makes sense to purchase samosas from Maharaja Catering or continue making them in-house. Chintu estimates that $125 of overhead is spent producing 500 weekly servings of samosas. The other costs are typically 50% direct labour and 50% on direct materials. Chintu is wondering what the breakeven revenues and units are with regards to samosa servings. She has also heard of margin of safety and CVP graphs- she would like more details on those.
How do I solve for this? how get CVP graphs and margin of safety?
This is the only information thats why I got stuck with this
Expenses Samosa
Maharaja
Chintu
Price
1.25
Overhead
125
unit
100
Unit
500
Shipping fee
50
Direct labour
50%
direct Materials
50%
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