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2. (a) Rainbow Limited is a manufacturer of industrial belts. Presently, they are manufacturing 3 types of belts A, B and C. The following information has been extracted from their cost records:

Particulars	Belt_A	Belt_B	Belt_C
Selling Price	Rs.410	Rs.257	Rs.327
Less: Variable Cost
Direct Materials	Rs.62	Rs.39	Rs.52
Direct Labour	Rs.40	Rs.25	Rs.33
Indirect Materials	Rs.4	Rs.3	Rs.3
Indirect Labour	Rs.2	Rs.1	Rs.2
Power	Rs.2	Rs.1	Rs.2
Supervision	Rs.20	Rs.12	Rs.17
Sales Commissions	Rs.10	Rs.6	Rs.8
Advertising	Rs.200	Rs.125	Rs.167
Architectural Costs	Rs.40	Rs.25	Rs.33
Total Variable Cost	Rs.380	Rs.237	Rs.317
Contribution margin	Rs.30	Rs.20	Rs.10

The management of the Company foresees sales of 2,00,000 units in the coming period, consisting of 20,000 units of A, 100,000 units of B, and 80,000 units of C. The Companys fixed costs estimated for the period are Rs 25,50,000.

Required

1. What is the firms BEP (in units) if the given sales mix is maintained?
2. Justify the approach used by you to calculate the BEP (in units).
3. (a) What would operating income be if 20,000 units of A, 80,000 units of B and 100,000 units of C are sold and other variables remain unchanged? (b) What will be the new BEP (in units) if these relationships persist in future?

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