Q#4 The HASF Ink Ltd income statement for the preceding year is presented below except as noted the cost / revenue relationship for the coming year is expected to follow the same pattern as in the preceding year income statement for the year ending March 31 is as follow s

Sales (200,000 units @ 2.5 Each) Rs. 5, 00,000

Variable cost 3, 00,000

Contribution margin 2, 00,000

Less Fixed cost 100,000

Profit before tax 100,000

Less tax 35,000

Profit after tax 65,000

Required

1. What is the break- even point in amount and units?

2. Suppose that a plant expansion will add Rs. 50,000 and increase capacity by 60% how many units would have to be sold after the addition to break even

3. At what level of sales will the company be able to maintain its present pre- tax profit position even after expansion?

4. The company management feels that it should earn at least Rs.10, 000 pre taxes per annum on the new investment what sales volume is required to enable the company to maintain existing profit.

5. Suppose the plant operated at full capacity after the expansion what profit will be earned