Kitty Limited plans to manufacture bar fridges. According to the 2020 budget conducted by management, budgeted sales are expected to be R10 000 000 with 5 000 units being produced. The company's direct material and direct labour costs are expected to be 5000 cents and 3500 cents per unit respectively. Whereas, the fixed factory overheads and fixed administrative expenses are budgeted at R450 000 and R200 000 respectively. Furthermore, management has decided that R150 should be paid to sales consultants as an incentive for each unit sold.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
![QUESTION 2
REQUIRED:
Use the information provided below to answer the following questions:
2.1 Calculate the total net profit for the estimated figures.
2.2 Calculate the break-even quantity
23 Calculate the break-even value
2.4 Calculate the break-even value using the marginal income ratio.
2.5 Calculate the target sales volume to achieve a profit of R15 000 000.
2.6 Calculate the new break-even quantity and value if the selling price is increased by 10%.
2.7 Calculate the margin of safety in units at the original budgeted volume and price
INFORMATION
Kitty Limited plans to manufacture bar fridges. According to the 2020 budget conducted by management, budgeted sales
are expected to be R10 000 000 with 5 000 units being produced. The company's direct material and direct labour costs
are expected to be 5000 cents and 3500 cents per unit respectively. Whereas, the fixed factory overheads and
fixed administrative expenses are budgeted at R450 000 and R200 000 respectively. Furthermore, management has
decided that R150 should be paid to sales consultants as an incentive for each unit sold.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb7280b74-34a0-43f8-894d-12efbddc8a8d%2Fe336aca1-84d6-424b-b501-ac745c34c7c7%2Fspzay6_processed.jpeg&w=3840&q=75)
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