Question # 4

Gullever Engineering Ltd, manufactures lathe machines. Its budget data for next year is as under:

Rs.

Sales (2,000 units) 8,000,000

Variable cost 3,000,000

Contribution margin 5,000,000

Fixed cost 2,000,000

Operating income 3,000,000

Required:

1. Calculate breakeven point in units and amount.
2. Calculate margin of safety in units and amount

Question # 5

Normal annual capacity of Karachi Company is 200,000 units and the sales price is Rs.32 per unit. Unit cost of components is as under:

Variable cost per unit (Rs.) Fixed Cost(Rs.)

Direct material 9.00 --

Direct labour 10.0 --

Factory overhead 2.00 400,000

Non-manufacturing cost 3.00 100,000

Total cost 24.0 500,000

Required:

1. Calculate the breakeven point in rupees and in units. Prove your answer.
2. Compute amount of sales required to earn a profit of Rs.420,000. Prove