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Sony Ltd sells camera to retailers. Retail typically sell cameras to consumers for R40 each. Budgeted production for the forthcoming period is 2000 cameras. Budgeted fixed overheads are R2400000. variable cost per unit is expected to be R6.50. Contribution margin per unit which is equal to 74%.
Calculate Question 1: contribution per unit and percentage
Question 2: the margin of safety unit and percentage
Question 3: the consultant have suggested that sony Ltd needs to decrease the selling price charged to retailers by at least 10% if they are to retain their existing customers . however, they believe that sony Ltd can use some buyer power of their own over supplier of materials such that the variable cost per camera would fall by 5%. prepare the margin income statement to calculate the break-even point in units, ratio and sales revenue
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