Milton Ltd. produces a molded plastic casing. LX 201. for desktop computer. Summary data from its current year income statement are as follows: Revenues Variable costs Fixed costs Operating income Rs 50,00,000 30,00,000 21,60,000 Rs (1,60,000) Kamna. Milton's president, is very concerned about Milton's poor profitability. She asks Amit production manager, and Sudhir, controller, to see if there are ways to reduce costs. After two weeks Amit retums with a proposal to reduce variable costs to 52 per cent of revenues by reducing the costs Milton currently incurs for safe disposal of wasted plastic. Sudhir is concerned that this would expose the company to potential environmental liabilities. He tells Amit. "We would need to estimate some of these potential environmental costs and include them in our analysis." You can't do that. "Amit replies. "We are not violating any laws. There is some possibility that we may have to incur environmental costs in the future, but if we bring it up now, this proposal will not go through because our senior management always assumes these costs to be larger than they turn out to be. The market is very though, and we are in danger of shutting down the company. We don't want all our colleagues to lose their jobs. The only reason our competitors are making money is because they are doing exactly what I am proposing." Required Calculate Milton's breakeven revenues for the current year. 2 Calculate Milton's breakeven revenues if variable costs are 52 per cent of revenues. Calculate Milton's operating income in current year if variable costs had been 52 per cent of revenues. Given Amit's comments, what should Sudhir do? [5]