X Ltd manufactures a semi-conductor for which the cost and price structure is given as follows:

Rs. per Unit

Selling Price


Direct Materials


Direct Labour


Variable Overheads


Fixed Cost

Rs. 2,00,000

The product is manufactured by a machine, whose spare part costing Rs. 2,000 needs a replacement after every 100 pieces of output. This is in addition to the above costs. Assume that no defectives are produced and that the spare parts are readily available in the market at all times at Rs. 2,000.

  1. Prepare the profitability statement for the production levels of 2,000 units and 3,000 units, when the Fixed Cost = Rs. 1,00,000.
  2. What is the BEP for the above data?
  3. Comment on the BEP, if the Fixed Cost can be reduced to Rs. 1,80,000 from the existing level of Rs. 2,00,000.