After a study of cost-volume relationships, the Kaling Tubes Company Ltd concluded that its costs for any given volume of sales could be expressed as `1,00,000 for fixed costs plus variable costs...

After a study of cost-volume relationships, the Kaling Tubes Company Ltd concluded that its costs for any given volume of sales could be expressed as `1,00,000 for fixed costs plus variable costs equal to 60 per cent of sales. The company’s range of volume was from zero to `8,00,000 of sales. Prepare a graph, which will illustrate this cost-volume relationship. Also draw a proper sales line to the graph to form a break-even chart. Determine the break-even point.

A competitor operating a plant of the same size as Kaling also has fixed cost of approximately `1,00,000 per year, but his break-even point is `3,00,000 of sales. What may be the probable causes of the difference between the break- even points of the Kaling Company Ltd and its competitor?