During the current year AB Ltd. Showed a profit of Rs. 1,80,000 on a sale of Rs. 30,00,000. The variable expenses were Rs. 21,00,000. You are required to calculate: 1. The break even sales at present. 2. The break even sales if variable cost increased by 5%. 3. The break even sales to maintain the profit as at present, if the selling price is reduced by 6 per cent

To calculate the break-even sales, we need to find the contribution margin per unit, which is the difference between the selling price per unit and the variable cost per unit.

Given:
Total sales = Rs. 30,00,000
Variable expenses = Rs. 21,00,000
Profit = Rs. 1,80,000

1. Break-even sales at present:
   Contribution margin per unit = Selling price per unit – Variable cost per unit
   = (Total sales / Number of units sold) – (Total variable expenses / Number of units sold)
   = (30,00,000 / Number of units sold) – (21,00,000 / Number of units sold)

Since the profit is Rs. 1,80,000, this represents the contribution margin after covering the fixed expenses. Therefore, we can set up the equation:

Profit = (Contribution margin per unit) * Number of units sold

1,80,000 = (30,00,000 / Number of units sold – 21,00,000 / Number of units sold) * Number of units sold

1,80,000 = (30,00,000 – 21,00,000) / Number of units sold

Number of units sold = 1,80,000 / (30,00,000 – 21,00,000)
Number of units sold = 1,80,000 / 9,00,000
Number of units sold = 0.2

Break-even sales at present = Number of units sold * Selling price per unit
Break-even sales at present = 0.2 * 30,00,000
Break-even sales at present = Rs. 6,00,000

2. Break-even sales if variable cost increased by 5%:
   New variable cost per unit = Old variable cost per unit * (1 + Increase percentage)
   New variable cost per unit = Rs. 21,00,000 / Number of units sold * (1 + 5%)
   New variable cost per unit = Rs. 21,00,000 / Number of units sold * 1.05

Using the same logic as above, we calculate the break-even sales with the new variable cost.

3. Break-even sales to maintain the profit as at present, if the selling price is reduced by 6 percent:
   New selling price per unit = Old selling price per unit * (1 – Decrease percentage)
   New selling price per unit = (30,00,000 / Number of units sold) * (1 – 6%)
   New selling price per unit = (30,00,000 / Number of units sold) * 0.94

Again, using the same logic as above, we calculate the break-even sales with the new selling price.

By substituting the appropriate values into the equations, you can find the break-even sales in each scenario. Let me know if you need further assistance with the calculations!