QUESTION THREE ERS Itd is a company engaged in the manufacture of sports shoes. The last financial year to 31 January has seen the company produce its lowest profit for five years. The summary profit...

Extracted text: QUESTION THREE ERS Itd is a company engaged in the manufacture of sports shoes. The last financial year to 31 January has seen the company produce its lowest profit for five years. The summary profit and loss account for the year to 31" January is set out below K к Sales revenue (50,000 shoes @ K70) 3,500,000 Cost of sales Direct materials 1,400,000 Direct labour 1,150,000 Variable manufacturing overheads 200,000 Fixed manufacturing overheads 410,000 Total manufacturing costs 3.160.000 Gross profit 340,000 Selling and distribution overheads (Fixed) 134,000 Administration cost 148.400 Net profit 57,600 REQUIRED: Compute the break-even level of activity and revenue to break-even on the basis of last year's results