Question: QUESTION 5 (25 marks) James Ltd. has the following information available for this year: Total costs Budgeted sales (units) The selling price is 12

QUESTION 5 (25 marks) James Ltd. has the following information available for

QUESTION 5 (25 marks) James Ltd. has the following information available for this year: Total costs Budgeted sales (units) The selling price is 12 per unit. September 86,000 15,000 October 146,000 30,000 *Page 4 of 7 a) What is James Ltd.'s margin of safety in units for September? (7 marks) b) If next year, fixed cost rise by 12%, variable costs fall by 4% and the BEP remains the same as the current year, how much must the selling price be? (4 marks) c) Explain why the accountant's view of breakeven is often criticised. (9 marks) d) Discuss how operational gearing affects a company's profits and give an example of how it can be increased. (5 marks)

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