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Rehman Sugar Mills is well known for its refined sugar. In the year of 2013, it sold 35,000 bags containing 1.75 million kilograms of refined sugar at Rs. 2,250 each bag.

The variable production and operating costs for the year were;

a)   Purchase cost of sugarcane is Rs.15 per kg;

b)   Crushing process requires Rs.7 per kg;

c)   Boiling the pulp needs Rs. 3 per kg;

d)  Sugar refinement costs Rs. 2 per kg; &

e)   Other variable operating expenses Rs. 9 per kg

Rent of the factory’s outlet for the year was Rs. 1.5 million per month. Depreciation of the company’s plant and other assets was Rs. 36.80 million per year. Misc. fixed operating expenses were Rs.16 million for the year.

For year 2014, it is expected that the sale price will remain the same. But, the demand will be increased by 10%. Accordingly, the variable costs will also be increased by 15%.


1.   Break even point in units and value both for the current and next year.  (3 Marks)

2.   Income statements of both the years.                                                       (4.5 Marks)

3.   If the mills need to earn net profit of Rs. 350,000 in the year of 2014, how many bags it needs to sell.  (2.5 marks)



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Please Discuss here about this assignment.Thanks

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hi guys i hove done 1st part of this assignment.

  • Break even point in units and value both for the current and next year. (3 Marks)

    Contribution Margin = Fixed Cost + Profit

    Fixed Costs = rent + Misc. fixed operating expenses

    Fixed Costs = Rs. 18 Million+ Rs. 16 Million

    Fixed Costs = Rs. 34 Million

    Break even point in units = FC / P – V

    Break even point in units = 34 Million / 2, 250 – 36

    Break even point in units = 34 Million / 2, 214

    Break even point in units = 15, 357  

is it correct or not?  if i am wrong then plz guide me thanks. 

Rent of the factory’s outlet for the year = Rs. 1.5 Million / month

Rent of the factory’s outlet for the year = 1.5 Million x 12 months

Rent of the factory’s outlet for the year = Rs.18 Million

o g tusi grt ho

o g ay theek v ay ya nain -:(

Misc. fixed operating expenses = Rs. 16 Million  ye kahan jay ga

why we will not use depreciation value of 36 million as fix cost 

pls explain

hello Rosali

why are you not considering depreciation in your fix cost..

any reason

oh sorry 

according to book the fixed costs = rent + depreciation

Fixed Cost = Rs. 18, 000, 000 + 36.80 Million

fixed cost = kitna bna


and the 

Misc. fixed operating expenses = Rs. 16 Million ye kidhr jay ga ?


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