Ding Dong manufacturing company produces different products all of which have the same contribution to sales ratio of 20%. The present sale is Rs. 60,000 per month and fixed cost is Rs. 80,000 per annum.

The following information is available from the budgeted forecasts for the coming year :

Volume of sales No change

Increase in variable cost 5%

Estimated fixed cost Rs. 90,000

You are required to calculate :

(1) The present yearly profit.

(2) The percentage increase required in selling prices during the forth coming budget year in order to maintain the existing level of profit.