Question:
A Company budgets for a production of 150000 units. The variable cost per unit is Rs.14 and fixed cost per unit is Rs.2 per unit. The company fixes the selling price to fetch a profit of 15% on cost.
Required,
A. What is the break- even point? B] What is the profit/volume ratio? C] If the selling price is reduced by 5%, how does the revised selling price affects the Break Even Point and the Profit/Volume Ratio? D] If profit increase of 10% is desired more than the budget, what should be the sales at the reduced price?