The Sky Inc, manufactures plastic lawn ornaments. Currently the firm manufactures three items:

reindeer, snowmen and flamingos. For each reindeer , two snowmen and four flamingos are sold.

Reindeer Snowmen Flamingos

Variable product cost Rs. 12.00 Rs. 15.00 Rs. 25.00

Variable selling expenses 6.00 4.50 8.00

Variable administrative expenses 3.00 5.50 6.00

Selling price 40.00 35.00 60.00

Annual fixed factory overhead Rs. 420,000

Annual fixed selling expenses 150,000

Annual fixed administrative expenses 80,178

The firm is in a 40 percent tax bracket.

Required:

a. What is the annual break-even point in revenue?

b. How many reindeer, snowmen, and flamingos are expected to be sold at the break-even point?

c. If the firm desires pre-tax income of Rs. 250,428 how much total revenue is required and how

many units of each product must be sold?

d. If the firm desires after-tax income of Rs. 155,718 how much total revenue is required and how

many units of each product must be sold?

e. If the firm achieves the revenue determined in (d), what is its margin of safety in Rupees and as