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Jeankelly Company manufactures custom-designed baby shoes and other baby accessory products

Accounting

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Jeankelly Company manufactures custom-designed baby shoes and other baby accessory products. The costs are as follows:

1. Variable costs are R10.80 per pair of custom pair of baby shoes,
2. The selling price is R16 per custom pair of baby shoes and
3. Fixed costs are R 66 560.

 

Required:

 

a) What is the contribution margin for one pair of baby shoes? 3 marks

b) How many baby shoes must Jeankelly sell to break? 3 marks

c) If Jeankelly company sells 13 000 pairs of baby shoes, what is the operating income? 4 marks

d) Calculate the margin of safety in units and in sales revenue if 13 000 baby pairs of shoes are sold. 2 marks

e) Draw the CVP graph showing fixed cost, variable costs and break-even point. 8 marks