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  3. the following information relates to a firm which

The following information relates to a firm which manufactures and sells widgets. (a) Using the...

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The following information relates to a firm which manufactures and sells widgets. (a) Using the sales level of 100 units, calculate the following: (i) Contribution per unit (ii) Total cost (iii) Total profits using marginal costing format (2marks)(3marks)(3marks) (b) (i) With the use of a labelled diagram, illustrate the breakeven point of the firm- (ii) Determine the (5 marks) a) number of units and (2 marks) b) amount of sales that are required for the firm to break even. (2 marks) (iii) On the same diagram, in (b)(i) above, indicate the margin of safety . State the importance of knowing the margin of safety (2 marks) (c) The firm is considering purchasing the widgets at $30 each instead of manufacturing them but the factory will remain idle. (i) Advise the firm as to a course of action. (4 marks) (ii) State TWO non-accounting factors which the firm must take into consideration when making its decision. (2 marks) GO ON TO NEXT PAGE

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