Question 3

Answer the questions from the information provided.

3.1 Use the information provided below to calculate the following:

3.1.1 Break-even quantity (4 marks)

3.1.2 Margin of safety (in units) (3 marks)

3.1.3 Total Marginal Income and Net Profit/Loss, if 90% of the books are sold. (4 marks)

INFORMATION

Lucida Printers manufactures counter books. The following information was extracted from the budget for the year ended 31 May 2022:

Sales	60 000 units
Selling price per unit	R50
Variable manufacturing costs per unit	R15
Variable marketing costs per unit	R10
Fixed manufacturing overhead costs	R400 000
Fixed marketing and administration costs	R200 000

3.2 Calculate the following from the information provided below:

3.2.1 The selling price per unit that will enable the company to break even. (4 marks)

3.2.2 The number of units that must be sold to earn a net profit of R1 196 800 if the selling price increases by R36 per unit and the variable costs increase by 10%. (5 marks)

INFORMATION

The following information was provided by Sabrina Limited for the only product that it manufactures:

Fixed costs per annum	R1 788 000
Variable costs per unit	R320
Selling price per unit	R680
Expected sales	10 000 units