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What should be the percentage increase in sales

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Question: Management of ABC Ltd.is seeking your advice relating to two of its product X' and 'Y'. ' It sells its product 'X' at Rs.15 per unit. In a particular period when company produces and sells its 80,000 units, it incurs a loss of Rs.5 per unit. If the volume is raised to 2,00,000 units, it earns a profit of Rs.4 per unit. Calculate Break even points of this product both in terms of rupees as well as in terms of units.

For product 'Y' break-even sales level is at Rs.50,00,000. P/V ratio of the product is 20%. The company now wants to replace the old machinery being used in the production of product 'Y' with new one.This will result in an increase of its fixed cost by 25% though selling price and variable cost remains unchanged. What should be the percentage increase in sales for break-even if fixed cost goes up by 25%?

 

Reference no: EM132981092

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