Financial planning

Section A — Extract C: Brightwater Foods Ltd

Brightwater Foods makes chilled ready meals in Norfolk for three supermarket chains. In 2025:

Item	£m
Revenue	12.0
Cost of sales	7.2
Other operating expenses	3.6

It plans to launch a premium range. Each meal would sell to supermarkets for £5.00 with variable costs of £3.00. Extra fixed costs would be £600 000 a year. It expects to sell 400 000 meals in the first year. The launch needs £2.5 million for new equipment. The owners are considering a bank loan or selling a 30% stake to a venture capital firm. Brightwater holds two weeks of ingredient stock. Waste is 6% of ingredients. The operations director wants to introduce just-in-time (JIT) ordering and lean production. Interest rates have risen from 3.5% to 5.25% and food inflation is 7%.

From Paper 2: Business activities, decisions and strategy

1(b)6 marks

Calculate the break-even output for the premium range and the margin of safety at the forecast sales, and explain one limitation of break-even analysis for Brightwater.

Score 0 / 6 · 0 of 1 marked

This paper is written by Plasmo in the style of the Edexcel A-Level Business exam. It is not a past paper and is not produced or endorsed by the exam board.

Financial planning Exam Questions: Edexcel A-Level Business | Plasmo