REQUIRED

Use the information given below to calculate each of the following independently:

3.1 Expected total Marginal income and Net profit/loss. (4 marks)

3.2 Margin of safety (as a percentage). (4 marks)

3.3 Selling price per unit that will enable the company to break even. (4 marks)

3.4 Sales value required to achieve a net profit of R599 040. (4 marks)

3.5 Break-even value using the marginal income ratio, if the company spends an additional

R87 040 on salaries.

(4 marks)

INFORMATION

Umdloti Limited manufactures tables. The following information was extracted from the budget for the

year ended 31 December 2020:

1. Expected production and sales (units) 1 000

2. Selling price per table R1 200

3. Variable manufacturing costs per table R696

4. Fixed manufacturing overheads R216 960

5. Other costs:

Sales commission per table R120

Fixed administrative and marketing costs R144 000