Solution:
Case 1:
(Marks: 2+3+3+3)
I. Break-even level of output (Units) = (Fixed costs +Target Income)/ Unit Contribution Margin
Unit Contribution margin = Sale price per unit – variable cost per unit
= 3500-1500 = 2000
Break-even level of output (Units) = (25, 00,000+800,000)/ 2000 = 1650 units
II. Margin of safety (value)= Actual sales – Break-even sales
= Rs. 59,
00,000 - Rs. 5,775,000
= Rs. 125000
Case 2:
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