Question 3

Study the information given below and answer each of the following questions independently:

3.1 Calculate the total Marginal Income and Net Profit/Loss if all the tables are sold. (4 marks)

3.2 Use the marginal income ratio to calculate the break-even value. (4 marks)

3.3 Calculate the new total Marginal Income and Net Profit/Loss, if an increase in advertising expense

by R100 000 is expected to increase sales by 400 units.(4 marks)

3.4 How many units must be sold if the company wishes to earn a net profit of R298 920. (4 marks)

3.5 Based on the expected sales volume of 2 400 units, determine the sales price per unit (expressed

in rands and cents) that will enable the company to break even. (4 marks)

INFORMATION

Samcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30

June 2022:

1. 2. 3. 4. 5. Total production and sales Selling price per table Variable manufacturing costs per table: Direct material Direct labour Overheads Fixed manufacturing overheads Other costs: Fixed marketing and administrative costs Sales commission 2 400 units R1 200 R288 R192 R96 R216 960 R144 000 5%