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Jabu manufactures and sells ProductX. During the most recent financialperiod, he sold 500 units at R750 each. There were no units of Product X in...
Jabu manufactures and sells ProductX. During the most recent financialperiod, he sold 500 units at R750 each. There were no units of Product X in opening or closing inventory. Sales people are paid a commission of 5% onsales. The following additional informationis available for this sales level:
Fixed administrative cost per unit R90.00
Total fixed manufacturing overhead R120 000
Total fixed marketing cost R50 000
Direct material usage per product 2kg
Direct material price per kilogram R14.50
Total direct labour cost R47 500
Required
Compile amarginal income statement to determine the break-even units and break-evenvalue.
What is themargin of safety ratio?
Allmanufacturing cost increases with 10%. The marketing director estimates that sales volume will increase with 5%if an advertising campaign of R10 000 is undertaken. What is the operating income for Jabu?
Refer to (c)above. Do you think that it is viablefor Jabu to launch the advertising campaign?
