A home‑based baker produces 200 loaves of bread each month. Variable cost per loaf is ₦350 and monthly fixed overheads are ₦45,000. Each loaf sells for ₦600. After three months the baker introduces a premium loaf that costs an additional ₦150 in variable cost and sells for ₦900. She plans to allocate 30\% of the monthly production to premium loaves while keeping total output at 200 loaves.

i) Find the new break‑even total number of loaves.

ii) Compute the increase in monthly profit compared with the original situation.

Question

A home‑based baker produces 200 loaves of bread each month. Variable cost per loaf is ₦350 and monthly fixed overheads are ₦45,000. Each loaf sells for ₦600. After three months the baker introduces a premium loaf that costs an additional ₦150 in variable cost and sells for ₦900. She plans to allocate 30\% of the monthly production to premium loaves while keeping total output at 200 loaves.

i) Find the new break‑even total number of loaves.

ii) Compute the increase in monthly profit compared with the original situation.

Accepted Answer

Break‑even quantity = 153 loaves; profit increase = ₦9,000

Neco 2024 Commerce Question 17

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