Question 3

Travel On Inc. sells luggage. they sell a duffle bag, a carry-on suitcase and a deluxe suitcase. The price and variable cost for each type of luggage is listed below.

Price Variable Cost

Duffle Bag R100 R25

Carry-on R180 40

Deluxe 300 120

The total fixed costs for Travel On Inc. equals R60,000. For every 8 duffle bags, Travel On Inc sells it sells 3 carry-on suitcases and 1 deluxe suitcase. with the following

The total fixed costs for Travel On Inc. equals R60,000. For every 8 duffle bags. Travel On Inc sells, 3 carry-on suitcases and 1 deluxe suitcase are sold.

Required:

1.) Calculate the package contribution margin.

2.) Calculate the break-even point in units for duffle bags, carry-on suitcases and deluxe suitcases.

3.) If Travel On Inc. has a target income for the coming year of R300,000, how many packages will the company have to sell?

4.) Based on your answer in Part C, prepare a contribution margin income statement for the coming year.

5.) What is the companys margin of safety in packages?