Sonny Ltd is an upcoming backyard salon situated in Gauteng, South Africa. They have been operating very well ever since they started, the only problem they have is to account for each and every cost they have incurred so that they can be able to establish whether they are breaking even or not. You have been approached by the owner of the company to assist them on cost accounting issues since you have done the Cost Accounting module. The following extract from Sonny Ltd for the month of August $2023$ has been availed to you:

The total cost per unit was P$336\mathrm{.}00$ which includes the following:

i$.$ Direct materials and direct labour price per unit were P$88\mathrm{.}00$ and P$144\mathrm{.}00$ respectively.

ii$.$ The company overheads per unit which included variable and fixed overheads were P$56\mathrm{.}00$ and P$48\mathrm{.}00$ respectively.

Additional information:

The selling price per unit was P$480\mathrm{.}00,$ the Fixed overhead was P$96000\mathrm{.}00$ and the net profit amounted to P$72$ per unit. Sonny Ltd total budgeted sales for the coming month is $8800$ units.

Required: Calculate the following:

$($i$)$ Sales breakeven point, in units for the month $(3$ marks$)$

$($ii$)$ Margin of safety for the coming month $(3$ marks$)$

$($iii$)$ Next month budgeted profit $(2$ marks$)$

$($iv$)$ Sales required to achieve a profit of P$192000\mathrm{.}00$ in a month

Answer rating: 100% (QA)

Sonny Ltd Cost Accounting Analysis Lets break down the costs and solve the problems 1 Contribution M... View the full answer