WTL Ltd produces a stylish yet affordable handbag that sells for R30 per unit. Variable costs to manufacture and sell are R16 per unit. Fixed costs and expenses are budgeted at a total of R 54600 per year. Required: 3.1 Discuss the concept 'contribution margin.' 3.2 Calculate the break-even value in Rands. 3.3 Calculate the net income to be expected on sales of R240 000 . 3.4 Calculate the sales revenue required to produce net income of R7000. 3.5 If fixed costs were to be increased by R 25760 , calculate the increase in sales revenue that would be required to cover the increase in fixed costs. 3.6 If the selling price is decreased by 20%, what percentage increase in the number of units sold is necessary to offset this decrease in selling price. QUESTION FOUR [25] The following information pertains to SMR Ltd for the three months ended 31 December. Additional information: 1. It is expected that debtors will settle their accounts as follows: - 20% in the month of invoice - 70% in the month after the month of invoice, and - 5% in the second month after the month of invoice. - The remaining 5% is usually vritten off as bad debts. 2. Trade creditors are paid in the month after the purchases at a discount of 5%. 3. 50% of the salaries and wages are weekly wages. Because wages are paid weekly, usually 10% of the wages are paid in the month following the month in which they were incurred. 4. Expenses are paid as they arise. 5. The favourable bank balance on 1 November was R 16000 . Required: 4.1 Prepare the cash budget for November and December. (20) 4.2 Discuss how the budgeting process in an organisation benefits a functioning standard costing system