Reference no: EM13501927

The budgeted income statement by product lines of Multi Products Ltd.,

for 2003 is as follows:

	Product A	Product B	Product C
Sales	Rs. 2,00,000	Rs. 5,00,000	Rs. 3,00,000
Variable expenses:
Cost of goods sold	90000.00	1,70,000	1,50,000
Selling expenses	30000.00	90,000	45,000
Overhead:
Fixed	36000.00	90,000	54,000
Administrative	16000.00	40,000	24,000
Income before tax	28000.00	10,000	27,000
Income tax @ 40%	11200.00	4,000	10,800
Net income	16800.00	6,000	60,200

All products are manufactured in the same facilities under common administrative control. Fixed expenses are allocated among the products in proportion to their budgeted sales volume:

(a) Computer the budgeted break-even point of the company as a whole, from the data provided.

(b) What would be the effect on budgeted income if half of the budgeted sales volume of Product B were shifted to Product A and C in equal rupee amounts, so that the total budgeted sales in rupee remains the same?

(c) What could be the effect of the shift in the product-mix suggested in (b) above on the budgeted break-even point of the whole company?