Question
Ms. Noorulain, a software engineer, works for the A.R interiors. She designs the construction structures. Her total fixed cost for designing a structure is PKR
Ms. Noorulain, a software engineer, works for the A.R interiors. She designs the construction structures. Her total fixed cost for designing a structure is PKR 40,000. The variable cost is PKR400 each, and she sells them for PKR2000 each. She currently sells 30 construction structures each month. a) What are her break-even point, NOI, and DOL now at the current level of sales? [Marks 1.5] b) If the price of a structure rises to PKR 600 and she keeps the sales price constant at PKR 2000 and fixed costs also increase to PKR45000. What will the new break-even point, NOI, and DOL be? [Marks 1.5] c) If sales are expected to increase to 36 structures, what would be the resulting percentage change in operating profit (EBIT) from its current position? What will be the new NOI assuming the DOL in part a.
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