Required: 1. Based on the above cost and volume data, use the highlow method to identify the variable cost per unit and annual fixed costs for the company.

2. On the basis of your answers in part (1) above, calculate the breakeven point of the company in both units and sales revenue. 3. The company expects to manufacture and sell 150 000 units this year. Calculate the margin of safety in percentage terms and the operating leverage at the expected sales level. 4. The manager of the company has an annual fixed salary of R80 000 and a yearly variable bonus which is equal to 2% of the operating profit. The maximum bonus is 50% of the annual salary. What would be the minimum desired level of sales revenue from the managers point of view if he wishes to maximise his income?

Question 3 20 MARKS Walkona Ltd manufactures and sells a single product. The selling price is R18. The following information relates to its yearly production and cost data. (Assume that there is no change to the stock level of the company.) AWN Unit Volume 300 000 150 000 420 000 280 000 230 000 120 000 Total Cost R 4 000 000 2 800 000 6 600 000 3 900 000 3 200 000 2 100 000 Required: Based on the above cost and volume data, use the high-low method to identify the variable cost per unit and annual fixed costs for the company. 5 marks 2. On the basis of your answers in part (1) above, calculate the breakeven point of the company in both units and sales revenue. 5 marks The company expects to manufacture and sell 150 000 units this year. Calculate the margin of safety in percentage terms and the operating leverage at the expected sales level. 5 marks The manager of the company has an annual fixed salary of R80 000 and a yearly Variable bonus which is equal to 2% of the operating profit. The maximum bonus is 50% of the annual salary. What would be the minimum desired level of sales revenue from the manager's point of view it he wishes to maximise his income