Answered: calculate the change in the net profit…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...

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calculate the change in the net profit if sales increase by R600 000 (using the contribution ratio and assuming that the cost behaviour relationship remains the same)

management believes that they could increase sales by 30%, if they improve the quality of the product. To increase the quality of the end product, they would increase the variable cost by R4.50 and they would also have to employ an additional quality inspector who is paid R60 000 for the year.

Draft a marginal costing statement for next year taking the changes into account. Your statement must include all information in rand totals, per unit as well as percentage.

calculate the new breakeven point in units and rands( using the formulae method)

advise the company as to whether or not the changes should be implemented

	Rand total	Per unit	Percentage
Sales(22 500)	1 800 000	80	100%
Less total variable cost	1 350 000	60
contribution	450 000
Less; Total fixed cost	360 000
Net profit	90 000

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