QUESTION $3$

$(20$ Marks$)$

$3\mathrm{.}1$

REQUIRED

Calculate the following from the information provided below:

$3\mathrm{.}1\mathrm{.}1$ Break$-$even value using the marginal income ratio

$(4$ marks$)$

$3\mathrm{.}1\mathrm{.}2$ Margin of safety $($in units$)$

$(4$ marks$)$

$3\mathrm{.}1\mathrm{.}3$ Break$-$even quantity if a sales commission of $20\%$ is introduced.

$(4$ marks$)$

INFORMATION

Ascot $($Pty$)$ Ltd manufactures a single product and the following budget has been produced by the

management accountant:

All the units produced are expected to be sold.

$3\mathrm{.}2$

REQUIRED

Use the information provided below to answer the following questions independently:

$3\mathrm{.}2\mathrm{.}1$ If Kempster Limited decides on a profit objective of R$400000,$ calculate the target sales

volume.

$3\mathrm{.}2\mathrm{.}2$ Calculate the total Marginal Income and Profitlloss if the company decides to reduce

the selling price to R$28$ per unit.

INFORMATION

Kempster Limited expects to incur the following costs to produce and sell $20000$ units of its product at R$30$

each: