Reference no: EM132634173

Question - COST VOLUME PROFIT ANALYSIS

Jeankelly Company manufactures custom-designed baby shoes and other baby accessory products. The costs are as follows:

1. Variable costs are R10.80 per pair of custom pair of baby shoes,

2. The selling price is R16 per custom pair of baby shoes and

3. Fixed costs are R 66 560.

Required -

a) What is the contribution margin for one pair of baby shoes?

b) How many baby shoes must Jeankelly sell to break?

c) If Jeankelly company sells 13 000 pairs of baby shoes, what is the operating income?

d) Calculate the margin of safety in units and in sales revenue if 13 000 baby pairs of shoes are sold.

e) Draw the CVP graph showing fixed cost, variable costs and break-even point.