Study the information provided by the child welfare organisation and answer the following questions independently. The expanded contribution margin model must be used to answer questions 3.1, 3.2 and 3.4. 3.1 Calculate the break-even quantity. (5 marks) 3.2 Calculate the sales volume required to achieve an operating profit of R2 112 000. (5 marks) 3.3 Calculate the selling price per unit (expressed to the nearest cent) that will enable to welfare organisation to achieve an operating profit of R50 per unit. (5 marks) 3.4 Suppose the selling price is decreased by R20 per unit with the expectation that this would increase the sales volume by 20%. Is this a good idea? Motivate your answer with the relevant calculations. (5 marks) 3.5 Calculate the margin of safety (in units) if the selling price drops to R110 per unit with the expectation that the fixed costs can be reduced to R711 900. (5 marks)

The financial manager of Colatonic Ltd read about the plight of the local child welfare organisation which aimed to supplement its funds by making and selling cooking bags which can slow-cook meals or keep food warm for long periods. The financial manager approached the board of directors who agreed that the company should assist the organisation. After discussions with the president and treasurer of the welfare organisation the following budgeted information for 2024 was gathered to assist with trying to improve the profitability and break-even quantity for the year: The fixed and variable manufacturing costs are estimated to be R240 000 per annum and R42 per unit respectively. The selling price of the cooking bags will be R120 each. The selling and distribution costs are expected to total R15 000 per month plus 5% of sales. The administration costs are estimated at R31 000 per month plus R6 per unit sold. 15 000 cooking bags are expected to be sold.