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(a) 2XU manufactures athletic clothing range and incurs the following costs as part of its operations (listed below). Complete the table with a Y to
(a) 2XU manufactures athletic clothing range and incurs the following costs as part of its operations (listed below). Complete the table with a Y to indicate the nature of each cost. (6 marks) MOH Period Prime Conversion Direct Material Direct Labour Depreciation of manufacturing plant Factory supervisor salary Factory utilities expenses Fabric to make clothes Marketing expenditure Employees in factory making clothes (b) Why is it important for organisations to understand their breakeven point when their main goal is to make a profit? (2 marks) (c) (i) 2XU sells each item of clothing for $50. The variable costs are $30 for each item and the total fixed costs are $450,000. Calculate the breakeven point in both units and sales revenue. (2 marks) (ii) Prepare a CVP Statement of profit and loss to demonstrate the profit of zero for the break even units. (3 marks) (d) If actual sales is $2,500,000 calculate the safety margin in dollars and the safety margin ratio. Explain the significance of this ratio. 12 morkel
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