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Determine Margin of Safety for Point C

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Question - TED Ltd. has fixed costs of Rs.625,000 per year and variable costs of Rs. 7.50 per unit. Its product sells for Rs. 12.50 per unit. The optimal plant capacity is 200,000 units.

a. Compute the PV Ratio.

b. Compute the break-even point in units and revenue.

c. How many units should the company plan to sell if it wishes to have net profit after tax of Rs. 350,000 (assume tax rate of 30%).

d. Determine Margin of Safety for Point C. Also, what will be the impact on Margin of Safety is the fixed cost becomes Rs. 550,000.

Reference no: EM133090436

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