QUESTION FOUR $[25]$

GKJ Ltd manufactures and sells a single product. The budgeted monthly information for the next year is as follows:

Sales per month

$70000$ units

Selling price per unit

R$5$

Variable costs per unit

R$2$

Fixed costs per month

R$150000$

Initial investment

R$2000000$

$4$

Required:

$4\mathrm{.}1$

Calculate the budgeted profit for the year by using cost$-$volume$-$profit principles. $(5)$

$4\mathrm{.}2$

How many units must be sold per year if the company wishes to earn $10\%$ net profit per

unit on the initial investment? $(5)$

$4\mathrm{.}3$ What is the breakeven point in units and in value? $(5)$

$4\mathrm{.}4$ Using the figures for the year, assume that there is an increase of $10\%$ in fixed costs and

an increase to R$2\mathrm{.}50$ per unit in variable costs.

Calculate:

$4\mathrm{.}4\mathrm{.}1$ The breakeven point in value and in units $(5)$

$4\mathrm{.}4\mathrm{.}2$ The margin of safety value and the margin of safety ratio $(5)$