A company has the following costs for the first quarter of 2021

Cost Item Shs.

Employee salaries.17,000

Rent.11,000

Insurance.2,000

Depreciation on equipment.6,000

Variable costs: Labour24,000

: Materials14,000

: Direct Expenses2,000

: Overheads2,000

Additional information:

i)The selling price per unit is Shs. 10.

ii)The above variable costs relate to activity level of Shs. 60,000 sales.

iii)All other costs except those indicated as variable are fixed.

iv)The budgeted sales for the year are Shs. 200,000

Required:

i)Calculate the break-even point in units and in shillings.(4 marks)

ii)Calculate the Margin of Safety in units and in shillings and the margin of safety

ratio(3 marks)

iii) The company aims at generating a net income of at least Sh 21,000.If the company's tax rate is 30%, determine how many units the company should be able to sell and the amount of total sales in order to achieve this target. (3 marks)