QUESTION 2 (20 Marks)

REQUIRED:

Use the information provided below to answer the following questions:

2.1 Calculate the total net profit for the estimated figures. (3 marks)

2.2 Calculate the break-even quantity (3 marks)

2.3 Calculate the break-even value (2 marks)

2.4 Calculate the break-even value using the marginal income ratio. (3 marks)

2.5 Calculate the target sales volume to achieve a profit of R15 000 000. (3 marks)

2.6 Calculate the new break-even quantity and value if the selling price is increased by 10%. (4 marks)

2.7 Calculate the margin of safety in units at the original budgeted volume and price (2 marks)

INFORMATION

Kitty Limited plans to manufacture bar fridges. According to the 2020 budget conducted by management, budgeted sales

are expected to be R10 000 000 with 5 000 units being produced. The company's direct material and direct labour costs

are expected to be 5000 cents and 3500 cents per unit respectively. Whereas, the fixed factory overheads and

fixed administrative expenses are budgeted at R450 000 and R200 000 respectively. Furthermore, management has

decided that R150 should be paid to sales consultants as an incentive for each unit sold.