The budgeted income statement by product lines of Multi Products Ltd.,
for 2003 is as follows:
|
Product A
|
Product B
|
Product C
|
|
Sales
|
Rs. 2,00,000
|
Rs. 5,00,000
|
Rs. 3,00,000
|
|
Variable expenses:
|
|
|
|
|
Cost of goods sold
|
90000.00
|
1,70,000
|
1,50,000
|
|
Selling expenses
|
30000.00
|
90,000
|
45,000
|
|
Overhead:
|
|
|
|
|
Fixed
|
36000.00
|
90,000
|
54,000
|
|
Administrative
|
16000.00
|
40,000
|
24,000
|
|
Income before tax
|
28000.00
|
10,000
|
27,000
|
|
Income tax @ 40%
|
11200.00
|
4,000
|
10,800
|
|
Net income
|
16800.00
|
6,000
|
60,200
|
All products are manufactured in the same facilities under common administrative control. Fixed expenses are allocated among the products in proportion to their budgeted sales volume:
(a) Computer the budgeted break-even point of the company as a whole, from the data provided.
(b) What would be the effect on budgeted income if half of the budgeted sales volume of Product B were shifted to Product A and C in equal rupee amounts, so that the total budgeted sales in rupee remains the same?
(c) What could be the effect of the shift in the product-mix suggested in (b) above on the budgeted break-even point of the whole company?