QUESTION $3(20$ Marks$)$

REQUIRED

Study the information provided below and answer the following questions independently:

$3\mathrm{.}1$ Use the contribution margin ratio to calculate the sales value required to break even. $(4$ marks$)$

$3\mathrm{.}2$ Calculate the margin of safety in units. $(4$ marks$)$

$3\mathrm{.}3$ If the ingredients cost $10\%$ more than budgeted, calculate the total contribution margin

and total operating profit$/$loss$.(4$ marks$)$

$3\mathrm{.}4$ Suppose Chocolos Limited decides to add pecans to the ingredients at a cost of R$2\mathrm{.}40$

per unit. It could then enable the company to charge R$104$ per box. If the sales volume

decreases by $5\%,$ determine the change in the contribution margin. $(4$ marks$)$

$3\mathrm{.}5$ Calculate the number of units that must be sold to earn an operating profit of R$198512$ if

the fixed manufacturing overhead costs increase by $10\%$ and direct labour costs decrease

by $10\%.(4$ marks$)$

INFORMATION

Chocolos Limited produces chocolates. Each box of chocolates sells for R$96.$ The budgeted costs to produce

$35000$ boxes of chocolates for $2024$ are as follows:

Production costs: R

Sugar $98000$

Other ingredients $714000$

Direct labour $252000$

Boxes $212800$

Fixed manufacturing overhead costs $100000$

Selling and administrative costs:

Sales commission $(2\%$ of sales$)67200$

Salaries $192000$

Other fixed costs $59360$