Stallings paints company has fixed operating costs of Rs.3 million a year. Variable operating costs are Rs.1.75 per half pint of paint produced and the average selling price is Rs.2 per half pint.

1) What is the annual operating breakeven point in half pints (QBE)? In rupees of sales (SBE)?

2) If variable cost decline to Rs.1.68 per half pint, what would happen to the operating breakeven point (QBE)?

3) Compute the degree of operating leverage (DOL) at the current sales level of 16 million half pints.

4) If sales are expected to increase by 15 % from the current sales level, what would be the resulting percentage change in operating profit (EBIT) from current position?