SECTION B: SHORT QUESTION (20 MARKS) ANSWER THE QUESTION QUESTION 1 Tingan Company manufactures and sells a telephone answering machine. The company's income statement for the most recent year is given below: Percent Total R 1 600 000 1 280 000 320 000 240 000 80 000 Per Unit R 80 64 Sales (20 000 units) Less variable expenses Contribution margin Less fixed expenses Net income 100 ? ? 16 Management is anxious to improve the company's profit performance and has asked for several items of information. REQUIRED (a) Compute these company ratios: i. CM ratio (2) ii. Variable expense ratio (2) (b) Compute the company's break-even point in both units and sales Rand. Use the equation method. (5) (c) Assume that sales increase by R700 000 next year. If cost behaviour patterns remain unchanged, by how much will the company's net income increase? Use the CM ratio to determine your answer. (4) (d) Refer to the original data. Assume that next year management wants the company to earn a minimum profit of R112 000. How many units will have to be sold to meet this target profit figure? (3) (e) Refer to the original data. Compute the company's MS (margin of safety) in both Rand and percentage form. (4) [20]