Draickline limited makes a single product and the relevant cost data is as follows; Fixed costs...

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Draickline limited makes a single product and the relevant cost data is as follows; Fixed costs per annum Unit selling price variable cost per unit Forecast sales units Capital employed Target Return on capital employed Ksh. 100,000 Ksh.20 Ksh.10 12,500 units Ksh. 150,000 20% Required: (a) Determine contribution margin ratio (b) Dertermine the sales volume that will enable the company to break even (c) Determine the number of units that must be sold in order for the company to 3 marks 3 marks achieve its desired ROCE 3 marks (d) Compute the margin of safety ratio 2 marks (e) What are the managerial implications of the results of d) above 2 marks (f) Explain the limitations of Cost-Volume-Profit (CVP) analysis as a decision making tool 2 marks Draickline limited makes a single product and the relevant cost data is as follows; Fixed costs per annum Unit selling price variable cost per unit Forecast sales units Capital employed Target Return on capital employed Ksh. 100,000 Ksh.20 Ksh.10 12,500 units Ksh. 150,000 20% Required: (a) Determine contribution margin ratio (b) Dertermine the sales volume that will enable the company to break even (c) Determine the number of units that must be sold in order for the company to 3 marks 3 marks achieve its desired ROCE 3 marks (d) Compute the margin of safety ratio 2 marks (e) What are the managerial implications of the results of d) above 2 marks (f) Explain the limitations of Cost-Volume-Profit (CVP) analysis as a decision making tool 2 marks

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The detailed answer for the above question is provided below Answer a Contribution Margin Ratio The contribution margin ratio is calculated by dividin... View the full answer