MAC2601 Assignment 2 2025

MAC2601 – Management Accounting■Assignment 2 – 2025■Due Date: 5 September 2025



Instructions
Instructions:
1. Answer all questions.
2. Show all workings clearly.
3. Round off all amounts to the nearest Rand.
4. Use proper formats and calculations where applicable.


Question 1
Question 1: Cost-Volume-Profit Analysis [15 Marks]

ABC Ltd manufactures and sells a single product. The selling price is R100 per unit. The variable cost is R60 per unit and fix

Required:
(a) Calculate the break-even point in units. (3)
(b) Calculate the number of units required to earn a target profit of R120,000. (3)
(c) Determine the margin of safety in units if actual sales are 10,000 units. (3)
(d) Briefly explain the significance of the margin of safety. (6)


Answer 1
Answer 1:

(a) Break-even point (units) = Fixed Costs / (Selling Price - Variable Cost)
= 240,000 / (100 - 60) = 6,000 units

(b) Target units = (Fixed Costs + Target Profit) / Contribution per unit
= (240,000 + 120,000) / (100 - 60) = 360, = 9,000 units

(c) Margin of Safety = Actual Sales - Break-even Sales = 10,000 - 6,000 = 4,000 units

(d) The margin of safety indicates how much sales can drop before the company incurs a loss. A higher margin of safety pro