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Q8: (Chapter 3) Heaven Ltd produces one type of bicycle and the details per month are as follows: Selling Price (per unit): 1,250 750 Variable
Q8: (Chapter 3) Heaven Ltd produces one type of bicycle and the details per month are as follows: Selling Price (per unit): 1,250 750 Variable cost per unit (including labour, material and other costs Fixed cost per month Budgeted production/sales per month (in units) 260,000 800 a. Calculate profit or loss expected if budget of selling 800 units is to be achieved. (2 marks) b. Calculate how many bicycles need to be sold per month in order to achieve break even point (BEP) and briefly explain what it means for Heaven Ltd. (4 marks) c. If shop aims to make a profit of 380.000 per month, how many bicycles should be sold per month (2 marks) d. Calculate margin of safety in units as well as percentage terms and briefly explain what it means for Heaven Ltd. (4 marks)
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