Hansa Ltd manufacturing a single product is facing severe competition in selling it at `50 per unit. The company is operating at 60 per cent level of activity at which level sales are `12,00,000;...

Hansa Ltd manufacturing a single product is facing severe competition in selling it at `50 per unit. The company is operating at 60 per cent level of activity at which level sales are `12,00,000; variable costs are `30 per unit; semi-variable costs may be considerd fixed at `90,000 when output is nil and the variable element is `250 for each additional 1 per cent level of activity; fixed costs are `1,50,000 at the present level of activity, but if a level of activity of 80 per cent or above is reached, these costs are expected to increase by `50,000. To cope with the competition, the management of the company is considering a proposal to reduce the selling price by 5 per cent. You are required to prepare a statement showing the operating profit at levels of activity of 60 per cent, 70 per cent and 82 per cent, assuming that: 1. The selling price remains at `50; and 2. The selling price is reduced by 5 per cent. Show also the number of units, which will be required to be sold to maintain the present profits if the company decides to reduce the selling price of the product 5 by per cent.