A Ltd produces single product. The company has the following information in year N: Selling price per
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Question:
A Ltd produces single product. The company has the following information in year N:
Selling price per unit $60
Variable cost per unit 40
Fixed costs of month 5,000 64,800 (of year)
Budgeted sales per month 400 units 4,800 (of year)
Requirement
1. Compute the margin of safety % in a month if actual sales in year N is as budgeted. (1.0 mark)
2. It is assumed that the average operating assets of the company are $'mil 0.5 and the required rate of return on investment is 17%/year. Compute ROI and RI of year N
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