QUESTION $3(20$ Marks$)$

REQUIRED

Study the information given 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 $($as a percentage$).(4$ marks$)$

$3\mathrm{.}3$ Determine the sales volume required to achieve double the forecast operating profit for

$2024.(4$ marks$)$

$3\mathrm{.}4$ Suppose Tiffany Ltd is considering a R$50$ per unit decrease in the selling price of the

product, with the expectation that this would increase the annual sales volume by $25\%.$

Calculate the total Contribution Margin and Operating Profit$/$Loss$.(4$ marks$)$

$3\mathrm{.}5$ Determine the selling price per unit $($expressed to the nearest cent$)$ that would enable

Tiffany Ltd to break even, if all $30000$ units are produced and sold. $(4$ marks$)$

INFORMATION

Tiffany Ltd produces a single product. The following forecasts for $2024$ are available:

The budgeted sales are $30000$ units at R$800$ per unit. Manufacturing costs include direct materials at R$160$

per unit, direct labour at R$100$ per unit, variable overheads at R$44$ per unit and fixed overheads of R$1920000.$

Marketing costs include a sales commission of $6\%($of the selling price$)$ and R$2592000$ for advertising and

salaries. Administration costs include R$4608000$ for fixed costs and variable costs of R$48$ per unit sold.