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Solve the target sales value using the marginal income ratio

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Reference no: EM132530525

Estimated units of production and sales = 3,000 units

Selling price per watch = Rs 900

Direct material per watch = Rs 270

Direct labor per watch = Rs 180

Variable manufacturing overhead cost per watch = Rs 90

Fixed manufacturing overhead cost Rs 282,000

Fixed marketing and admin cost Rs 150,000

Variable marketing and admin cost Rs 10%

Question 1: Calculate the break even quantity.

Question 2: Calculate the target sales value using the marginal income ratio, if profit of R 600 000 is desired.

The sales manager made the following proposal to increase profitability:

Decrease the selling price by R40 per unit and increase advertising expense by R 24 000 with the expectation that sales will increase by 10,%.

Question 3: should the sales manager proposal be accepted? Motivate your answer with the relevant calculations

Reference no: EM132530525

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