QUESTION 4 [20]

4.1 ABC Fashion is a retail business specializing in shoes. Here is some information about their operations: Selling Price per Shoe: R150

Variable Cost per Shoe: R80

Fixed Costs: R7,500

4.1.1 How many Shoes does ABC Fashion need to sell to cover their fixed costs? Hint: Calculate the Break Even Point in Units Show all calculations. (5)

4.1.2 What is the minimum sales revenue ABC Fashion must generate to cover their fixed costs? Hint: Calculate the Break Even Point in Revenue using the Margin Contribution Ratio (MCR) Show all calculations. (5)

4.1.3 If ABC Fashion wants to achieve a target profit of R4,500, how many Shoes do they need to sell? Show all calculations.

4.1.4 If ABC Fashion wants to achieve a target profit of R4,500, how much REVENUE would they have to earn? Show all calculations. (5)

Hint: Calculate the target profit in revenue i.e use the Margin Contribution Ratio (MCR)