Cadbury Schweppes Limited, a British chocolate and soft drink company, is planning to establish a subsidiary company in India to produce, Schweppes Mineral Water. 

Based on the estimated annual sales of 40,000 bottles of the mineral water, cost studies produced the following estimates for the Indian subsidiary: 

The Indian production will be sold by manufacturer’s representatives who will receive a commission of 8 per cent of the sale price. No portion of the British office expenses is to be allocated to the Indian subsidiary. It is required to: 

(i). Compute the sale price per bottle to enable management to realise an estimated 10 per cent profit on sale proceeds in India,

(ii). Calculate the break-even point in rupee sales for the Indian subsidiary on the assumption that the sale price is Rs. 11 per bottle.

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Material Labour Overhead Administration Total annual costs Rs. 1,93,600 90,000 80,000 30,000 Per cent of total annual cost that is variable 100% 70% 64% 30%