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Margin of safety in sales revenue

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Reference no: EM13530988

A retail dealer in garments is currently selling 24, 000 shirts annually. He supplies the following details for the year ended 31st March 2007.

Selling price per shirt: Rs.800

Variable cost per shirt: Rs.600

Fixed Cost:

Staff salaries: Rs.24, 00, 000

General Office Cost: Rs.8, 00, 000

Advertising Cost: Rs.8, 00, 000

As a Cost Accountant, you are required to answer the following each part independently:

1. Calculate Break Even Point and margin of safety in sales revenue and number of shirts sold.

2. Assume that 30, 000 shirts were sold during the year, find out the net profit of the firm.

3. Assuming that in the coming year, an additional staff salary of Rs.10, 00, 000 is anticipated, and price of shirt is likely to be increased by 15%, what should be the breakeven point in number of shirts and sales?

Reference no: EM13530988

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