The Y company operates a chain of franchise operators country wide and has approached you for advice. The manager is proposing to market a new pack consisting of a shirt with matching tie, socks and handkerchief. He wishes the financial potential to be assessed in relation to two methods of promoting sales-firstly by paying commission and secondly by a salary bonous.

The details are :

Sales price of pack Tk. 196.00

Variable cost per pack Tk. 168.00

Fixed costs including staff salaries Tk. 252,000.00

You are required to calculate

1. The break-even point in units if a sales commission of Tk. 12.00 per pack is paid to the sales staff.

2. The break-even point in value if no sales commission is paid, but staff salaries are increased by a total of Tk. 196,000.00

3. The margin of safety in units in (A) and (B) if sales reach 18,000 packs.