Coffeecup (Pty) Ltd operates a chain of coffee shops, with each shop making their own breads. The management accountant of Coffeecup (Pty) Ltd is reviewing a proposal to open a new shop. The following estimates for the new shop are available: 1. Standard price and variable costs: R per bread Sales price 20.00 Ingredients (7.00) Electricity (1.00) Contribution 12.00 2. Fixed cost per annum: R Bread labour 10 000 Shop labour 10 000 Rent of bakery and shop 30 000 Total fixed costs per annum 50 000 3. Budgeted sales per annum are 5 000 breads. Sales occurs evenly throughout the year. Assume 365 days in a year. Required: Calculate the following figures for the proposed new shop. (Round all answers to the nearest constant, i.e. no decimals): Q.1.1 The contribution to sales ratio.   Q.1.2 The break‐even point in sales revenue per annum.  Q.1.3 The break‐even point in breads sold per annum.  Q.1.4 The margin of safety in breads per annum.

Question

Coffeecup (Pty) Ltd operates a chain of coffee shops, with each shop making their own breads. The management accountant of Coffeecup (Pty) Ltd is reviewing a proposal to open a new shop.
The following estimates for the new shop are available:
1. Standard price and variable costs:
R per bread
Sales price 20.00
Ingredients (7.00)
Electricity (1.00)
Contribution 12.00
2. Fixed cost per annum:
R
Bread labour 10 000
Shop labour 10 000
Rent of bakery and shop 30 000
Total fixed costs per annum 50 000


3. Budgeted sales per annum are 5 000 breads. Sales occurs evenly throughout the year.
Assume 365 days in a year.

Required:
Calculate the following figures for the proposed new shop. (Round all answers to the nearest
constant, i.e. no decimals):
Q.1.1 The contribution to sales ratio.  
Q.1.2 The break‐even point in sales revenue per annum. 
Q.1.3 The break‐even point in breads sold per annum. 
Q.1.4 The margin of safety in breads per annum. 

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