Homework Answers
| 3.1) | |
| Sales Revenue (160,000 * R300) | R48,000,000 |
| Less: Variable costs (160,000 * R160) | R25,600,000 |
| Marginal Income (Contribution margin) | R22,400,000 |
| Less: Fixed Costs | R1,450,000 |
| Budgeted Net Profit | R20,950,000 |
| 3.2) | |
| Selling price per unit | R300 |
| Less: Variable cost per unit | R160 |
| Marginal income per unit or contribution margin per unit (a) | R140 |
| Total Fixed Costs (b) | R1,450,000 |
| Break-even point in quantity (b/a) | 10,357 units |
| Marginal income per unit or contribution margin per unit (a) | R140 |
| Selling price per unit (b) | R300 |
| Contribution Margin Ratio (c = a/b*100) | 46.67% |
| Total Fixed Costs (d) | R1,450,000 |
| Break-even point in value (d/c) | R3,106,921 |
| 3.3.1) | |
| New Fixed costs (R1,450,000*110/100) | R1,595,000 |
| New Variable cost per unit (R160 + R0.20) | R160.20 |
| Selling price per unit | R300 |
| Less: New Variable cost per unit | R160.20 |
| New Marginal income per unit or contribution margin per unit (a) | R139.80 |
| New Total Fixed Costs (b) | R1,595,000 |
| New Break-even point in quantity (b/a) | 11,409 units |
| New Marginal income per unit or contribution margin per unit (a) | R139.80 |
| Selling price per unit (b) | R300 |
| New Contribution Margin Ratio (c = a/b*100) | 46.60% |
| New Total Fixed Costs (d) | R1,595,000 |
| New Break-even point in value (d/c) | R3,422,747 |
| 3.3.2) | |
| Total Sales (b) | R48,000,000 |
| Less: Break-even sales | R3,422,747 |
| Margin of Safety (a) | R44,577,253 |
| Safety margin as a percentage (a/b*100) | 92.87% |
| 3.3.3) | |
| Profit required (a) | R600,000 |
| New Fixed Costs (b) | R1,595,000 |
| New Marginal income per unit or contribution margin per unit (c ) | R139.80 |
| Break-even units required to earn profit of R600,000 ([a + b] / c) | 15,701 units |
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