Moon (Ltd) manufacture specially treated garden benches. The following information was extracted from the budget...
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Accounting
Moon (Ltd) manufacture specially treated garden benches. The following information was extracted from the budget for the year ended 29 February 2016:
Estimated sales for the financial year 2 000 units
Selling price per garden bench R450
Variable production cost per garden bench:
- Direct material - R135
- Direct labour -R90
- Overheads -R45
Fixed production overheads R127 500
Selling and administrative expenses:
- Salary of sales manager for the year - R75000
- Sales commission-10% of sales
Required: (round off answers to the nearest rand or whole number)
3.1 Calculate the break-even quantity.
3.2 Determine the break-even value using the marginal income ratio.
3.3 Calculate the margin of safety (in Rand terms).
3.4 Determine the number of sales units required to make a profit of R150 000.
3.5 Suppose Moon (Ltd) wants to make provision for a 10% increase in fixed production costs and an increase in variable overhead costs of R15 per unit. Calculate the new break-even quantity.
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