Q. No. 2

Max Marks 08

COST, VOLUME AND PROFIT ANALYSIS

The annual budget of The Bond Co. shows:

Sales (40,000 units)		Rs. 80,000
Fixed production cost...	Rs. 20,000
Fixed marketing and administrative costs	26,200
Variable production cost..	19,000
Variable marketing and administrative costs	5,000
Total Cost		70,200
Profit from operations		Rs. 9,800

Required:

1. The break-even point in sales. (2 Marks)

2. The break-even point in units. (2 Marks)

3. The new break-even point in sales, assuming that fixed costs increase Rs. 1,867 and variable costs decrease Rs. 800 at the Rs. 80,000 sales level. (2 Marks)

4. Margin of Safety ratio at the given sales level. (2 Marks)