Jabu manufactures and sells Product X. During the most recent financial period, 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% on sales. The following additional information is 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 2 kg Direct material price per kilogram R14.50 Total direct labour cost R47 500 Required: (f) What is the margin of safety ratio?

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Jabu manufactures and sells Product X. During the most recent financial period, 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% on sales. The following additional information is 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 2 kg

Direct material price per kilogram R14.50

Total direct labour cost R47 500

Required:

(f) What is the margin of safety ratio?

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