PART A

Data concerning a company`s single product is as follows:

Rs per Unit

Selling price 6.00

Variable production cost 1.20

Variable selling cost 0.40

Fixed production cost 4.00

Fixed selling cost 0.80

Budgeted production and sales for the year are 10,000 units.

Required:

(a) What is the company`s breakeven point, to the nearest whole unit?

(4 marks)

It is now expected that the variable production cost per unit and the selling

price per unit will each increase by 10%, and fixed production costs will rise

by 25%.

(b) What will be the new breakeven point, to the nearest whole unit?

(8 marks)