ECO602 Assignment No 1 Solution Autumn 2021-vu-Forecasting and Budgeting
Sabroso is the favorite chicken brand in Pakistan. This brand has been working successfully for many years. It has outlets in various cities and is speedily expanding its business all over the Pakistan. No compromise on quality is the secret of its success. It provides variety of ready to cook and fully cooked chicken products. Suppose you have assigned the task to perform break-even analysis for this brand to analyze its performance. The hypothetical data required for analysis is given below. Total fixed cost incurred by this brand in production period= 10,00,000
Variable cost per unit = Rs. 500
Sale price per unit = Rs. 1000
Tax rate on income 20%
Requirements:
I.
Calculate the break-even level of output (units) required to get the desired/target
income (without tax) of Rs. 250,000 by using the above given data.
II.
Calculate the break-even quantity of output required to get desirable after-tax
income of Rs. 400,000 by using the given data.
III.
If value of actual sales is Rs. 26, 90,000 and the amount of break-even sales is Rs. 25,00,000, then find the value of margin of safety for this brand (only use the information is given in part III for calculation of margin of safety).
