Word Count : 927

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To address the problem from the perspective of *Accounting for Managers*, we begin by understanding the key elements provided: * Total production capacity = 500 fans per annum * Selling price per fan = Rs. 1,000 * Variable cost per fan = Rs. 800 * Fixed overheads = Rs. 24,000 per annum From this, we calculate: ### 1. Contribution per Unit Contribution per unit is calculated as: Selling Price – Variable Cost = Contribution \= Rs. 1,000 – Rs. 800 \= Rs. 200 per fan This contribution is the amount available from each unit to first cover fixed costs, and thereafter to generate profit. --- ### 2. Break-even Point (BEP) The Break-even Point is where Total Contribution = Total Fixed Costs. This can be computed in terms of both output (units) and sales (rupees). #### a) Break-even Output (Units) $$ \text{Break-even Output (Units)} = \frac{\text{Fixed Costs}}{\text{Contribution per unit}} = \frac{24,000}{200} = 120 \text{ fans} $$ So, the factory must produce and sell 120 fans to reach the break-even point. #### b) Break-even Sales (Rupees) $$ \text{Break-even Sales} = \text{Break-even Output} \times \text{Selling Price per fan} ____ ________ _____ ____ ______ _________.
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