Reference no: EM132803251
Problem 1: Calculate the break-even value using the marginal income ratio.
Problem 2: The sales manager proposes a R2 per unit reduction in selling price with the expectation that this would increase sales by 2 000 units. Is this a good idea? Motivate your answer.
Problem 3: Determine the selling price per unit if a net profit of R486 000 is desired.
INFORMATION
The following forecasts for January 2021 were provided by Walton's Manufacturers:
Sales (36 000 units) ----------------------------------------R1080 000
Direct materials cost per unit ----------------------------R8
Direct labour cost per unit ---------------------------------R5
Variable manufacturing overhead costs per unit ----------R2
Fixed manufacturing overheads -------------------------------R150 000
Fixed marketing and administrative costs--------------------R120 000
Sales commission ------------------------------R10% OF SALES