Bibi is a student & needs to improve her financial position. She is very good at...

  

Transcribed Image Text:

Bibi is a student & needs to improve her financial position. She is very good at making hamburgers & is considering running a weekend hamburger stall at a popular market near the campus. Bibi and her friends investigated the viability of her venture. Bibi's investigations, inquiries and negotiations yielded the following results: Site: Well-located site, entrance of market. Daily rate: R1 600 payable cash on the previous Monday. (R1 600 p/day) Market visitors: The landlord estimates +/-10 000 daily visitors for the market on weekends. Selling price: Another burger stand sells burgers at R25. Bibi decides to sell at the same price, & compete on taste & quality vs price. Equipment: Bibi determines the best option: Rent a fully equipped food trailer, custom-made for a hamburger stall. Daily rate: R400 payable a week in advance. (R400 p/day) Wages: Daily wage: younger sister assisting @ R50/hr x 6 hours (R300 p/day) Herself @ R60/hr x10 hours p/day = (R600 p/day) Part of staff expenses. (Total wages: R900 p/day) Ingredients: Calculated total cost price: R10 per hamburger (Ingredients needed, including packaging). Marketing: Bibi's uncle offers to make a striking billboard (3m x 2m) Cost: R2 000. This works out to about R20 per day. Transport and communication: Bibi estimates that transport & communication costs: +/-R80 per day. Part 1: Determine the Break-even point in units. Show formula and all calculations. (10) Part 2: How many hamburgers must Bibi sell to make a net profit: R1 500 per day? Show formula and all calculations. (5) Part 3: Determine the impact of changes in the following scenarios: Show all formulas and all calculations. 3.1: If the selling price increase to R30 each, what will the new break-even point be? (5) 3.2: If the landlord raises the site rental to R1 800 & trailer rental increases to R600 per day, what will the break-even point be? (: 3.3: If there is a 50% increase of ingredient cost price, what will the break-even point be? (5) Analyse the importance of Cost-Volume-Profit analysis to Bibi and indicate how she can utilize this method to improve profitability. Bibi is a student & needs to improve her financial position. She is very good at making hamburgers & is considering running a weekend hamburger stall at a popular market near the campus. Bibi and her friends investigated the viability of her venture. Bibi's investigations, inquiries and negotiations yielded the following results: Site: Well-located site, entrance of market. Daily rate: R1 600 payable cash on the previous Monday. (R1 600 p/day) Market visitors: The landlord estimates +/-10 000 daily visitors for the market on weekends. Selling price: Another burger stand sells burgers at R25. Bibi decides to sell at the same price, & compete on taste & quality vs price. Equipment: Bibi determines the best option: Rent a fully equipped food trailer, custom-made for a hamburger stall. Daily rate: R400 payable a week in advance. (R400 p/day) Wages: Daily wage: younger sister assisting @ R50/hr x 6 hours (R300 p/day) Herself @ R60/hr x10 hours p/day = (R600 p/day) Part of staff expenses. (Total wages: R900 p/day) Ingredients: Calculated total cost price: R10 per hamburger (Ingredients needed, including packaging). Marketing: Bibi's uncle offers to make a striking billboard (3m x 2m) Cost: R2 000. This works out to about R20 per day. Transport and communication: Bibi estimates that transport & communication costs: +/-R80 per day. Part 1: Determine the Break-even point in units. Show formula and all calculations. (10) Part 2: How many hamburgers must Bibi sell to make a net profit: R1 500 per day? Show formula and all calculations. (5) Part 3: Determine the impact of changes in the following scenarios: Show all formulas and all calculations. 3.1: If the selling price increase to R30 each, what will the new break-even point be? (5) 3.2: If the landlord raises the site rental to R1 800 & trailer rental increases to R600 per day, what will the break-even point be? (: 3.3: If there is a 50% increase of ingredient cost price, what will the break-even point be? (5) Analyse the importance of Cost-Volume-Profit analysis to Bibi and indicate how she can utilize this method to improve profitability.

Answer rating: 100% (QA)

Lets break down the calculations step by step Part 1 Breakeven point in units The breakeven point BEP is where total revenue equals total costs Total ... View the full answer