The Safeer Company manufactures and sells a single product. Price and cost data on product and operations are Selling price per unit Variable cost per unit Rs.25.00 Annual fixed costs Manufacturing overhead Selling and administrative Direct materials Rs.192,000 276,000 Rs.11.00 Direct labor 5.00 Manufacturing overhead Selling expenses Forecasted annual sales volume Rs.3,000,000 2.50 1.30 REQUIRED: 1. Safeer's breakeven point in units. 2. How many units Safeer must sell to earn Rs.156,000 of operating income. 3. Safeer estimates that its direct labor costs will increase by 8% next year. How many units must Safeer sell next year to reach the breakeven point? 4. If Safeer's direct labor cost increase by 8%, what must the selling price per unit of product be to maintain the same contribution margin ratio? 5. Calculate breakeven point in units, If Safeer's direct labor cost increase by 8% and manufacturing fixed cost to Rs.150,000.

Principles of Accounting Volume 2
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Chapter5: Process Costing
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Q. No. 01
The Safeer Company manufactures and sells a single product. Price and cost data on product and
operations are
Selling price per unit
Variable cost per unit
Rs.25.00
Annual fixed costs
Manufacturing overhead
Selling and administrative
Rs.192,000
276,000
Direct materials
Rs.11.00
Direct labor
5.00
Manufacturing overhead
Selling expenses
Forecasted annual sales volume Rs.3,000,000
2.50
1.30
REQUIRED:
1. Safeer's breakeven point in units.
2. How many units Safeer must sell to earn Rs.156,000 of operating income.
3. Safeer estimates that its direct labor costs will increase by 8% next year. How many units
must Safeer sell next year to reach the breakeven point?
4. If Safeer's direct labor cost increase by 8%, what must the selling price per unit of product be
to maintain the same contribution margin ratio?
5. Calculate breakeven point in units, If Safeer's direct labor cost increase by 8% and
manufacturing fixed cost to Rs.150,000.
Transcribed Image Text:Q. No. 01 The Safeer Company manufactures and sells a single product. Price and cost data on product and operations are Selling price per unit Variable cost per unit Rs.25.00 Annual fixed costs Manufacturing overhead Selling and administrative Rs.192,000 276,000 Direct materials Rs.11.00 Direct labor 5.00 Manufacturing overhead Selling expenses Forecasted annual sales volume Rs.3,000,000 2.50 1.30 REQUIRED: 1. Safeer's breakeven point in units. 2. How many units Safeer must sell to earn Rs.156,000 of operating income. 3. Safeer estimates that its direct labor costs will increase by 8% next year. How many units must Safeer sell next year to reach the breakeven point? 4. If Safeer's direct labor cost increase by 8%, what must the selling price per unit of product be to maintain the same contribution margin ratio? 5. Calculate breakeven point in units, If Safeer's direct labor cost increase by 8% and manufacturing fixed cost to Rs.150,000.
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