$3\mathrm{.}1$

REQUIRED

Study the information given below and answer each of the following questions independently:

$3\mathrm{.}1\mathrm{.}1$ Calculate the number of units that must be sold to break even. $(4$ marks$)$

$3\mathrm{.}1\mathrm{.}2$ Calculate the variable cost per unit that will enable to company to achieve an operating

profit of R$300000.(4$ marks$)$

$3\mathrm{.}1\mathrm{.}3$ Suppose the company wishes to spend R$120000$ more on advertising and decrease the

selling price by R$4$ per unit, with the expectation that sales volume will increase by $15\%.$

Determine the increase or decrease in the operating profit. $(4$ marks$)$

INFORMATION

Macy Ltd manufactures a product that sells for R$54$ each. Production and sales are presently $90000$ units

per year. The unit variable manufacturing costs are R$27\mathrm{.}30$ per unit, of which R$5$ per unit are for overheads.

Sales commission is $5\%($of sales$).$ Fixed costs amount to R$1360000$ for manufacturing overheads and

R$590000$ for selling and administrative activities.

$3\mathrm{.}2$

REQUIRED

Answer the following questions from the information given below:

$3\mathrm{.}2\mathrm{.}1$ Calculate the variable cost per unit. $(2$ marks$)$

$3\mathrm{.}2\mathrm{.}2$ Calculate the break$-$even value without using the break$-$even quantity. $(2$ marks$)$

$3\mathrm{.}2\mathrm{.}3$ How much can Avios Ltd afford to spend on advertising and still achieve an operating

profit of R$200000?(4$ marks$)$

INFORMATION

The following information regarding a product produced by Avios Limited is available:

Fixed costs per annum R$1560000$

Selling price per unit R$150$

Contribution margin ratio $52\%$

Sales volume $30000$ units