Williams Ltd. manufactures and sells a single product. The selling price is R18 . The following information relates to its yearly production and cost data. (Assume that there is no change to the stock level of the company.)

			Unit	Total
Year			Volume	Cost (R)
1			300,000	4,000,000
2			150,000	2,800,000
3			420,000	6,600,000
4			280,000	3,900,000
5			230,000	3,200,000
6			120,000	2,100,000

Required:

2.1 The company expects to manufacture and sell 150,000 units this year. Calculate the margin of safety in percentage terms and the operating leverage at the expected sales level.(5)

2.2 The manager of the company has an annual fixed salary of R80,000 and a yearly variable bonus which is equal to 2% of the operating profit. The maximum bonus is 50% of the annual salary. What would be the minimum desired level of sales revenue from the managers point of view if he wishes to maximise his income? (5)