### Sales to earn expected profit on proposed investment

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##### Reference no: EM13316223

From the books of Aggarwal Bors, the following information have been extracted: Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax 40% The firm is proposing to buy a new plant which can generate additional annual profit of Rs. 10,000. The fixed costs of new plant is expected to Rs. 4000. The new plant will increase the sales volume by Rs. 40,000. It can be assumed that the ratio between sales and variable costs remains the same. Calculate.

(i) New BEP

(ii) Sales to earn present level of profit (iii) Sales to earn expected profit on proposed investment (iv) Maximum profit potential after tax and plant expansion

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