2. Nixon Limited manufactures and sells a single product. The following data have been extracted from the current year budget.

Selling Price 50/unit

Variable Cost 10/unit

Budgeted Weekly Sales 2,000 units

Weekly Profit 72,000

Total weekly fixed cost 8,000

Required:

1. Calculate weekly sales units to generate the profit of 52,000?

2. Calculate break even sales units?

3. Calculate margin of safety?

30 marks

The companys production capacity is not being fully utilised. The possible strategies are under consideration. Each strategy involves reducing the unit selling price on all units sold with a consequential effect on the budgeted volume of sales. Details of each strategy are as follows:

Strategy	Reduction in Unit Selling Price	Expected increase in weekly sales volume
A	5%	10%
B	7%	15%
C	9%	20%

Required:

4. Evaluate the above three strategies and recommend which one is the most profitable?

20 marks