Question
Whitmore Enterprises produces a single product. The following information for 2021 is available: Fixed manufacturing costs R80 000 Variable manufacturing costs per unit R15 Selling
Whitmore Enterprises produces a single product. The following information for 2021 is available:
Fixed manufacturing costs | R80 000 |
Variable manufacturing costs per unit | R15 |
Selling price per unit | R30 |
Marketing costs: Advertising Sales personnels salaries and commission | R4 000 per month R5 000 per month and 10% of sales |
Admin costs: Salaries Other office costs | R12 000 per month R4 000 per month plus R2 per unit sold |
Number of units produced and sold | 15 000 |
Required:
4.1. Discuss the concept contribution margin. (5)
4.2. Calculate the break-even value in Rands. (5)
4.3. Calculate the income to be expected on sales of R1 200 000. (5)
4.4 Calculate the sales revenue required to produce net income of R7 000. (5)
4.5. If fixed costs were to be increased by R 25 760, calculate the increase in sales revenue that would be required to cover the increase. (5)
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