Question
Hello, please help me out with this. It is on COST VOLUME PROFIT ANALYSIS. Question 1: 20 Marks Jeankelly Company manufactures custom-designed baby shoes and
Hello, please help me out with this. It is on COST VOLUME PROFIT ANALYSIS.
Question 1: 20 Marks
Jeankelly Company manufactures custom-designed baby shoes and other baby accessory products. The costs are as follows:
> Variable costs are R10.80 per pair of custom pair of baby shoes,
> The selling price is R16 per custom pair of baby shoes and
> Fixed costs are R 66 560.
Required:
a) What is the contribution margin for one pair of baby shoes? 3 marks
b) How many baby shoes must Jeankelly sell to break? 3 marks
c) If Jeankelly company sells 13 000 pairs of baby shoes, what is the operating income? 4 marks
d) Calculate the margin of safety in units and in sales revenue if 13 000 baby pairs of shoes are sold. 2 marks
e) Draw the CVP graph showing fixed cost, variable costs and break-even point. 8 marks
Question 2: 20 Marks
Coffelicious is an espresso stand in a downtown office building. The average selling price of a cup of coffee is 1.49 and the average variable expense per cup is 0.36. The average fixed expense per month is 1,300. If 2,100 cups are sold each month on average
Calculate the following:
a) The contribution margin for Coffelicious? 2 marks
b) How many cups of coffee would have to be sold to attain target profits of 2,500 per month? 2 marks
c) Calculate the sales in rands (ZAR) that must be generated to attain target profits of 2,500 per month. 2 marks
d) The break-even sales rand (ZAR)? 2 marks
e) The break-even sales units? 2 marks
f) The margin of safety expressed in cups? 3 marks
g) The operating leverage? 3 marks
h) If sales increase by 20%, by how much should net operating income increase? 4 marks
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started