Reference no: EM132622051
Question - The Saleem & Jamal Company manufactures an engine for carpet cleaners called the "Snooper."
Budgeted cost and revenue data for the "Snooper" are given below, based on sales of 40,000 units.
Sales Rs 1,600,000
Less: Cost of goods sold 1,120,000
Gross margin Rs 480,000
Less: Operating expenses 100,000
Net income Rs 380,000
Cost of goods sold consists of Rs 800,000 of variable costs and Rs 320,000 of fixed costs. Operating expenses consist of Rs 40,000 of variable costs and Rs 60,000 of fixed costs.
Required -
a) Calculate the break-even point in units and sales rupees.
b) Calculate the safety margin.
c) Saleem & Jamal received an order for 6,000 units at a price of Rs 25.00. There will be no increase in fixed costs, but variable costs will be reduced by Rs 0.54 per unit because of cheaper packaging. Determine the projected increase or decrease in profit from the order?
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