Paras Biscuits produces biscuits for last 10 years. In the beginning, its scale of operation was very small. But with growing demand for its product, it increased the size of its production. A couple of years back, it bought a bigger machine to sustain increasing production. But unfortunately, only 80% of the capacity is utilised presently. The total turnover is Rs 8,00,000 at the rate of Rs 25 per unit. The details of the cost structure show that material cost is Rs 7.00 per unit. Labour cost per unit is Rs 6.75. Semi-variable cost is Rs 1,80,000 that includes variable cost of Rs 4.00 per unit. Fixed cost is Rs 85,000 up to 80% of the output, beyond which it goes up by Rs 20,000. The owner of the factory likes to know the answer to the following questions:
1. What would be the level of activity at the break-even point?
2. If it likes to earn 10% of the sales, what would be the number of units to be produced?
3. If the owner likes to make a profit of Rs 1,00,000, what should be the size of output?
4. What would be the sale price if BEP is brought down to 40% of the activity?