3.1

REQUIRED

Study the information given below and answer each of the following questions INDEPENDENTLY.

3.1.1 How many cupboards must be sold in order to break even?

3.1.2 Calculate the break-even value using the contribution margin ratio, if the company spends

R1 739 000 on advertising.

3.1.3 Calculate the selling price per unit to break-even if all 4 000 units are sold.

3.1.4 How many units must be manufactured and sold if the selling price decreases to R2 880 per unit

and the compahy wishes to earn an operating profit of R985 080?

3.1.5 Calculate the variable cost per unit if the fixed costs and selling price per unit remain the same

but the break-even quantity changes to 1 410 units.

INFORMATION

Tredwell Limited manufactures cupboards. The following information was extracted from the budget for the

year ending 31 March 2023:

The expected selling price of each cupboard is R3 000. Production and sales are estimated at 4 000 units

The manufacturing costs include direct materials of R720 per unit, direct labour of R480 per unit, variable

overheads of R240 per unit and fixed overheads of R1 085 000. Other costs include the salaries of the sales

personnel R1 200 000, a sales commission of 5% and fixed administrative costs of R1 240 000.