QUESTION $5$: $($CVP relationships$)(13$ MARKS$)$

Chaloba $($Pty$)$ Ltd manufactures tinned beans. The managing director of Chalobah would

like to use CVP relationships in making decisions. He has consulted you to help him with

making these decisions. The following cost and revenue data that relate to Chalobah $($Pty$)$

Ltd has been provided to you:

Selling Price per unit R$20\mathrm{.}00$

Number of units sold per annum $21000$ units

Budgeted variable manufacturing cost R$11\mathrm{.}00$ per unit

Budgeted fixed factory overheads R$35000$ per annum

Budgeted Selling variable expenses R$3$ per unit

Budgeted fixed selling expenses R$25000$ per annum

Required:

$5\mathrm{.}1$ Use the marginal costing principle to determine the net profit if Chaloba $($Pty$)$ ltd sold

$21000$ units. $(4)$

$5\mathrm{.}2$ Calculate Chalobah$$s break even point in units and in Rands. $(2)$

$5\mathrm{.}3$ Suppose that Chalobah wishes to generate a profit of R $120000.$

I. How many units does it have to sell to achieve this target profit? $(3)$

II$.$ Calculate the rand sales that Chalobah would have to generate to achieve

the same target profit. $(1)$

$5\mathrm{.}4$ Suppose Chalobah sales $21000$ units. Determine the margin of safety for Chalobah

as a percentage of the units sold. $(3)$