Reference no: EM132975401

Diamond PLC has been in the business of manufacturing and sales of the floor tile "STYLISH". The following cost structure of the tile "STYLISH "produced by the company is available for your information.

Rs.

Material 50

Direct labor 40

Variable Overhead 10

Other costs incurred by Diamond PLC are as follows.

Factory fixed overhead 2Mn

Selling and distribution fixed overhead 5 Mn

Fixed administration overhead 3 Mn

Selling price of a unit of STYLISH is Rs.250.

During the year 2022 the company budgeted to produce and sell 500,000 units. You are required to compute,

Problem a) Breakeven point in units and value

Problem b) Number of units to be sold to earn profit of Rs.20 Mn.

Problem c) Margin of safety

Problem d) If selling and distribution fixed costs are increased by Rs. 1,000,000 and material cost are also increased by 10% while the selling price is reduced by Rs.50, compute the number of units to be produced and sold to earn the currently budgeted profit by the company.

Problem e) Sketch a profit-volume graph from the above information showing clearly the two conditions analyzed for this organization. Explain the difference and importance of "Break-even chart" and "Profit-volume chart".