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Answer 2.1 & 2.2 & 2.3 Plz! Goggo Limited provides you with the following information: R12.50 Selling price per unit R79.00 Variable manufacturing cost per
Answer 2.1 & 2.2 & 2.3 Plz!
Goggo Limited provides you with the following information: R12.50 Selling price per unit R79.00 Variable manufacturing cost per unit: Direct material Direct labour R23.60 Manufacturing overheads R14.90 Total fixed manufacturing cost Manufacturing overheads R95 000 Non-manufacturing cost: Fixed marketing cost R30 000 Fixed administration cost R45 000 Sales commission 5% of the selling price per unit Required: 2.1 How many units must Goggo limited sell to break even? What is the breakeven sales value? (5) 2.2 What is the margin of safety units if Goggo Limited sells 6 950 units during the period? What are the implications of the margin of safety figure obtained? (5) 2.3 The marketing director makes the following statement at a meeting: "My department conducted market research and we found that a 10% decrease in selling price will give us an advantage as our prices will then be lower than the prices of our competitors. The 10% decrease in our sales price will increase sales volume to 9 500 units compared to our current sales volume of 7 500 units. The increase in sales volume will then obviously increase our profits." Do you agree with the marketing director? Compile a marginal income statement(s) and show any other calculations necessary to justify your findings. Assume this to be the only change. (15)Step by Step Solution
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