Question:
A company manufactures a product, currently utilizing 80% capacity with a turnover of Rs. 8,00,000 at Rs. 25 per unit. The cost data are as follows:
Material Cost is Rs. 7.50 per unit, Labour Cost is Rs. 6.25 per unit, Semi-Variable Cost (including the Variable Cost of Rs. 3.75 per unit) is Rs. 1,80,000. The Fixed Cost is Rs. 90,000 up to 80% level of the output; and beyond this, an additional amount of Rs. 20,000 will be incurred.
Calculate:
1. Activity level at BEP.
2. Number of units to be sold to earn a net income of 8% of sales.
3. Activity level needed to earn a profit of Rs. 95,000.
4. What should be the Selling Price per unit, if BEP is to be brought down to 40% activity level?