The Soft-Flow Ink Ltd’s income statement for the preceding year is presented below. Except as noted, the cost/revenue relationship for the coming year is expected to follow the same pattern as in the...

The Soft-Flow Ink Ltd’s income statement for the preceding year is presented below. Except as noted, the cost/revenue relationship for the coming year is expected to follow the same pattern as in the preceding year. Income statement for the year ending March 31 is as follows:

1. What is the break-even point in amount and units? 2. Suppose that a plant expansion will add `50,000 to fixed costs and increase capacity by 60 per cent. How many bottles would have to be sold after the addition to break-even? 3. At what level of sales will the company be able to maintain its present pre-tax profit position even after expansion? 4. The company’s management feels that it should earn at least `10,000 (pre- tax per annum) on the new investment. What sales volume is required to enable the company to maintain existing profits and earn the minimum required return on new investments? 5. Suppose the plant operates at full capacity after the expansion, what profit after tax will be earned?