Simon’s Sports is in the busin

Simon’s Sports is in the business of manufacturing sports equipment. The owner, Simon is looking for a possibility to manufacture tennis racquets. Simon is aware that, before investing in this venture, he needs to see if this is going to be profitable or not. He would like you to review his cost forecast and produce a feasibility study of this project to decide whether or not he should undertake this new project.

Simon has already done a great deal of research into the costs involved. Simon anticipates that the costs of producing tennis racquets would be:

Hire of machine

£550 per month

Material cost

£8.50 per racquet

Labour cost

  • Racquet framing
  • Racquet stringing

£9 per hour

The machine requires one person to operate it. Four racquets can be framed every hour.

Staff who string racquets can string two racquets in an hour.

Estimated Selling Price

£25 each

Start by explaining to Simon what the Break-even analysis is and how will this help him to make business decisions. Calculate the break-even analysis for Simon. Calculate expected profit if Simon is able to sell 1,100 racquets

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