Bharat Company Ltd. is at present operating at 60 per cent capacity, producing at the rate of 10,000 units a month, a single product selling for `9 a unit. The current year’s results are as follows:...

Bharat Company Ltd. is at present operating at 60 per cent capacity, producing at the rate of 10,000 units a month, a single product selling for `9 a unit. The current year’s results are as follows:

Although this firm is operating at a relatively high net profit rate of almost 20 per cent on sales even at a plant capacity of 60 per cent; it is a fact that if the price per unit could be reduced by 20 per cent, the volume of sales would increase to 1,80,000 units per year with an increase in the fixed manufacturing overheads of `9,000 per year. If sales price could be reduced by 331 /3 per cent, the volume of sales would increase to a full capacity of 2,00,000 units with increase in excess of the 60 per cent level as follows: fixed manufacturing overheads, `11,000; fixed selling expenses, `2,000; and fixed administrative expenses, `6,000. You are required to prepare (i) a comparative statement showing the net income under the three alternative profit-volume relationships, and (ii) compute the break-even sales point in each case.