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QUESTION 4 (20 marks) Funny Toy Shop produces and sells one kind of toy car. The following information is for the budget for the coming
QUESTION 4 (20 marks) Funny Toy Shop produces and sells one kind of toy car. The following information is for the budget for the coming year 2022: Forecast sales units Selling price Direct materials Direct labour Variable production overheads Fixed production overheads Selling expenses Administrative expenses 30,000 units $250 per unit $20 per unit $130 per unit $60 per unit $300,000 per annum $80,000 per annum $200,000 per annum Requ (Show all calculations and round ALL answers to 2 decimal places.) a. Calculate the contribution margin per unit. (2 marks) b. Calculate the contribution margin ratio. (2 marks) c. Calculate the margin of safety in (i) dollars and (ii) as a percentage of expected sales. (6 marks) d. Calculate the budgeted income for the coming year 2022. (4 marks) e. In order to increase sales, the sales manager proposes that the sales units will increase by 20% if the selling price per unit is reduced by 10%. Funny Toy Shop has the capacity to meet this increase in sales demand of the toy. Calculate the change in the income for the new proposal as compared to the original one from (d) and indicate whether it is an increase or decrease of the income. (6 marks)
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