from question F to 1.2

Question 1 (22 Marks) 1.1 The following information is available regarding ABC Ltd that produces a single product. The company's estimated net profit for the coming year is as follows: Sales 750 000 Less: Variable costs 352 500 Contribution 397 500 Less: Fixed costs 225 000 Net profit 172 500 (2) Required Calculate the following: a) The contribution margin b) How much revenue must ABC Ltd generate in order to break even? (2) c) The margin of safety ratio for the company (3) d) What Rand sales must the company generate in order to achieve a net income before tax of 10% of sales? (3) e) If the unit selling price and the unit variable cost each increases by 5%, what effect would this have on the contribution margin ratio? (2) f) If the management of the company decides to give a 2% commission on all sales, what effect would this have on the breakeven point in Rand? g) If the company pays the 2% commission, sales revenue is expected to increase by R72 500. What effect would this decision have on the company net profit? (3) 1.2 A company manufactures and sells two products, S1 and S2. The total annual sales are expected to be R630 000 with a sales mix of 2:3 respectively. The contribution margin ratio of Product S1 is 40%, while Product S2 has a contribution margin ratio of 50%. Annual fixed costs are estimated to be R 180 000. (3) Required Calculate the breakeven sales value in Rand