Answer to Question #273592 in Management for james

Question

Busta Limited plans to manufacture bar fridges and the following information is applicable: Estimated sales for the year 5 000 units at R3 400 each Estimated costs for the year: Variable costs Direct Material R520 per unit Direct Labour R350 per unit Variable Manufacturing Cost R110 per unit Selling expenses 6% of selling price per unit sold Factory overheads (all fixed) R625 000 Administrative expenses (all fixed) R462 000 REQUIRED: 1.1 Calculate the total net profit for the estimated figures. (3 marks) 1.2 Calculate the break-even quantity (3 marks) 1.3 Calculate the break-even value (2 marks) 1.4 Calculate the break-even value using the marginal income ratio. (3 marks) 1.5 Calculate the target sales volume to achieve a profit of R920 500.. (3 marks) 1.6 Calculate the new break-even quantity and value if the selling price is increased by 12% (4 marks) 1.7 Calculate the margin of safety in units at the original budgeted volume and price (2 marks)

Answer 1

Net profit =revenue - total expenses

Break even=Fixed/sales price per unit - variable cost per unit