QUESTION 2 (2.0 MARKS) A Ltd produces single product. The company has the following information in year N:

Selling price per unit $60

Variable cost per unit 40

Fixed costs of month 5,000 64,800 (of year)

Budgeted sales per month 400 units 4,800 (of year)

Requirement

1. Compute the margin of safety % in a month if actual sales in year N is as budgeted. (1.0 mark)

2. It is assumed that the average operating assets of the company are $'mil 0.5 and the required rate of return on investment is 17%/year. Compute ROI and RI of year N. (1.0 mark)