Reference no: EM132811064

Gardner Furniture produces two kinds of chairs: an oak model and a chestnut wood model. The oak model sells for R60 and the chestnut wood model sells for R100.

The variable expenses are as follows:

                                                             Oak                  Chestnut
Variable production cost per unit                    R30             R35
Variable selling & admin per unit                           R6           R5

Expected sales for next year are: 5 000 oak chairs and 1 000 chestnut chairs.
Fixed expenses are budgeted at R135 000 per year.

Problem 1: The annual break-even point in total sales for the expected sales mix is:

a. R270 000
b. R300 000
c. R485 000
d. R500 000

Problem 2: The company's overall contribution margin ratio for the expected sales mix is:

a. 40%
b. 45%
c. 50%
d. 60%

Problem 3: When there is a production constraint, a company should emphasise the  products with:

a. The highest unit contribution margins.
b. The highest unit contribution margin ratios.
c. The highest unit contribution margin per unit of the limited resource.
d. The highest unit contribution margins and contribution margin ratios