Tea Time 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 $($annual $/12)$ R$150000$

Initial investment R$2000000$

Required:

a$.$ Calculate the budgeted profit for the year by using CVP principles.

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

year on the initial investment?

c$.$ What is the breakeven point in units and in value?

d$.$ 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 the following:

i$.$ The breakeven point in value and in units

ii$.$ The margin of safety value and the margin of safety ratio