Question

A company is considering expansion. Fixed costs amount to Rs.4,20,000 and are
expected to increase by Rs.1,25,000 when plant expansion is completed. The present
plant capacity is 80,000 units a year. Capacity will increase by 50% with the
expansion. Variable costs, currently Rs.6.80 per unit, are expected to go down by
Rs.0.40 per unit with the expansion. The current selling price Rs.16 per unit and is
expected to remain same under each alternative. What are the breakeven points under
each alternative? Which alternative is better and why?

Answer 1

Answer:

Profit Planning) based on the following information, find out the break even point, the sales needed for a profit of rs.6,00,000 and the profit if 4,00,000 units are sold at rs.6 per unit.

Units Of Output 5,00,000

Fixed Costs Rs.7,50,000

Variable Cost Per Unit Rs. 2

Explanation:

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