Reference no: EM132552546
Greenweed Limited manufactures specially treated garden benches. The following information was extracted from the budget for the year ended 29 February 2020:
The estimated sales for the financial year are 2000 units. The selling price per garden bench is R450. Variable production cost per garden bench comprises of the following:
Direct materials: R135
Direct Labour: R90
Overheads: R45
The cost for fixed production overheads are R127 500 and selling and administrative expenses are broken down as follows:
Salary of sales manager for the year: R75 000
Sales commission: 10% of sales
Required: (Round of answers to the nearest rand or whole number)
Question 1: Calculate the breakeven quantity.
Question 2: Determine the break-even value using the marginal income ratio.
Question 3: Calculate the margin of safety.
Question 4: Determine the number of sales units required to make a profit of R150 000.
Question 5: Suppose Greenweed Limited wants to make provision for a 10% increase in fixed production costs and an increase in variable costs of R15 per unit. Calculate the new break-even quantity.