QUESTION THREE $[25]$

WTL Ltd produces a stylish yet affordable handbag that sells for R$30$ per unit. Variable costs to

manufacture and sell are R$16$ per unit. Fixed costs and expenses are budgeted at a total of R $54600$

per year.

Required:

$3\mathrm{.}1$ Discuss the concept $$contribution margin.$(4)$

$3\mathrm{.}2$ Calculate the break$-$even value in Rands. $(4)$

$3\mathrm{.}3$ Calculate the net income to be expected on sales of R$240000.(4)$

$3\mathrm{.}4$ Calculate the sales revenue required to produce net income of R$7000.(4)$

$3\mathrm{.}5$ If fixed costs were to be increased by R $25760,$ calculate the increase in sales revenue that would

be required to cover the increase in fixed costs. $(4)$

$3\mathrm{.}6$ If the selling price is decreased by $20\%,$ what percentage increase in the number of units sold is

necessary to offset this decrease in selling price. $($