j44 375.00 277.50 97.50 60.00 37.50 330.00 19.50 1.50 0.26 = 130 lakh/500 lakh) X 100 Break-even point (per cent capacity) = (Break-even sales Total capacity) x 100 = (2230.8 lakh 3500 lakh) x 100 = 46.15 per cent. The break-even capacity of the merged plant would be approximately 46.15 per cent. (b) Income Statement at 75 per cent Merged Capacity Sales (iakh) Less: Variable costs (0.74 x 1375) Contribution Less: Fixed costs Net profit Alternatively, (Actual sales - BE sales) XP/V ratio = 375 lakh - 230.769 lakh) x 0.26 = 337.50 lakh P.16.11 The XYZ Ltd operates a chain of toy stores. The stores sell 10 different styles of toys with iden- tical purchase costs and selling prices. The company is trying to determine the desirability of opening another store, which would have the following expense and revenue relationships per pair. Variable data: Selling price Cost of toy Salesmen's commission Total variable expenses 21.00 Annual fixed expenses: Rent 60,000 Salaries 2,00,000 Advertising 80.000 Other fixed expenses 20,000 3.60,000 Required (consider each question independently) 1. What is the annual break-even point in sales amount and in unit sales? 2. If 35,000 toys are sold, what would the store's net income be? 3. If the store manager was paid 20.30 per pair commission, what would the annual break-even point be in sales amount and in unit sales? 4. Refer to the original data. If the store manager were paid 20.30 per toy as commission on each toy sold in excess of the break-even point, what would be the store's net income if 50,000 toys were sold? 5. Refer to the original data. If sales commissions were discontinued in favour of 281,000 increase in fixed salaries, what would the annual break-even point be in amount and in unit sales! 6. If the store wants to build up stocks by the end of the accounting period, will your analysis still hold good