QUESTION 3

INFORMATION 3.1 Calculate the margin of safety (in units). 3.2 Calculate the total Contribution Margin and Operating Profit/Loss if an increase in the salaries expense of salespersons by R480 000 is expected to increase sales by 450 units. 3.3 Suppose Sinclair Limited decided to set the sales price at R1 728 per unit. If sales drop to 3500 units, how much more can the company spend on advertising and be able to generate an operating profit of R1 000000 ? 3.4 Should management consider a drop of R60 per unit in the selling price if the sales volume is expected to increase to 4400 units? Motivate your answer with the relevant calculations. 3.5 Determine the selling price per unit that will enable the company to achieve an operating profit of R1 602000