143 (0) Net sales 18,40,000 Less: Variable costs: Direct wages 12.09,964 Direct materials 2.44.552 Works expenses 88,292 Selling and distribution expenses 21.000 Administrative expenses 9.492 5,73,300 Contribution (C) 2,66,700 P/V ratio (c + Sales) (per cent) 31.75 BEP (amount) - Fixed costs (shut down expenditure)/P/V ratio = 21,54,221/03175 - 21,85,744.88 GID Break-even sales/Sales at 100 per cent capacity - 24,85,744,88/28,40,000 = 57.83 per cent P.16.6 The Soft-Flow Ink Ltd's income statement for the preceding year is presented below. Except as noted, the cost/revenue relationship for the coming year is expected to follow the same patter as in the preceding year. Income statement for the year ending March 31 is as follows: Sales (20,000 bottles o 25 each) 25,00,000 Variable costs 23,00.000 Fixed costs 1,00.000 4,00.000 Pre-tax profit 1,00,000 Less: Taxes (0.35) 35,000 Profit after tax 65,000 1. What is the break-even point in amount and units? 2. Suppose that a plant expansion will add 350,000 to fixed costs and increase capacity by 60 per cent. How many bottles would have to be sold after the addition to break-even? 3. At what level of sales will the company be able to maintain its present pre-tax profit position even after expansion? 4. The company's management feels that it should carn at least 210.000 (pre-tax per annum) on the new investment. What sales volume is required to enable the company to maintain existing profits and eam the minimum required return on new investments? 5. Suppose the plant operates at full capacity after the expansion, what profit after tax will be came