Question 1 [25 Marks] The present market for golf balls is estimated at 80 000balls per month and market research indicates that with a selling price of R3 per golf ball, a market penetration of one third to a half can be achieved within 12 months. Your company has devised a process which will produce golf balls with a fixed cost of R97 500 per month and a variable cost of R1.50 per ball Required 2.1 Calculate the contribution margin (CM) ratio (3 marks) 2.2 Calculate the breakeven point in units and in Rands (5 marks) 2.3 calculate the number of golf balls that must be sold in order to earn a target profit of R62 500 (3 marks) 2.4 Calculate the margin of safety as a percentage (Round off to the nearest whole number) (3 marks) 2.5 further market research reveals that at a selling price of R2.80 the company could reach sales of 135 000 balls a) Calculate the profit to be made if the company sells 135 000 golf balls per month (5 marks) b) Calculate the new breakeven point in units (3 marks) c) Should the company reduce the selling price? Give a reason for your answer (3 marks)