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Calculate breakeven value using the marginal income ratio

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Reference no: EM132568354

New Time company make bookshelves. The following information was extracted from the budget for the year ended 28 February 2019

Estimated sales for the financial year       2 000 units

Selling price per bookshelf                        R600

Variable production cost per bookshelf :

Direct material                          R180

Direct labour                           R120

Overheads                               R60

Fixed production overheads          R170 000

Selling and administrative expenses

Salary of sales manager for the year    R100 000

Salary commission 10% of sales

Required:

Calculate the following (answers correct to the nearest Rand or whole number)

Question 1: The breakeven quantity

Question 2: The breakeven value using the marginal income ratio

Question 3: The margin of safety in terms of units

Consider each of the following situations independently:

Question 4: Calculate the number of sales units required to make a profit R180 000

Question 5: Suppose New Time Company wants to make provision for a 10% increase in fixed production costs and an increase in variable overhead costs of R20 per unit. Taking these increases into account, calculate the new break-even quantity.

Reference no: EM132568354

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