Question
The following is Siyaya Corporation's contribution format income statement for last month: Sales R2 800 000 Less variable expenses R1 680 000 Contribution margin R1
The following is Siyaya Corporation's contribution format income statement for last month:
Sales | R2 800 000 |
Less variable expenses | R1 680 000 |
Contribution margin | R1 120 000 |
Less fixed expenses | R780 000 |
Net income (profit) | R340 000 |
A total of 56 000 units were produced and sold last month. The company has no beginning or ending inventories.
Required:
(a) What is the contribution per unit and the contribution to sales ratio? (6)
(b) What is the companys breakeven in sales Rands? (6)
(c) How many units would the company have to sell to attain a target profit of R550 000? (6)
(d) What is the companys margin of safety? (6)
(e) What is the company's degree of operating leverage in Rands? (6)
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