I need help with question 1 e. I am unsure how to answer this?

QUESTION 1 (continued) MAC3701/Assignment02/1/2020 4.3. REQUEST FOR TENDER FOR THE 2020 FINANCIAL YEAR In preparation for the upcoming by-elections in the hotly-contested Polokwane ward, the National Federal Executive (NFE) of a recently formed political party, Democratic Fighters for African Land ("DFAL") approved and placed the following advertisement in a prominent national newspaper DEMOCRACTIC FIGHTERS FOR AFRICAN LAND (DFAL) TENDER FOR THE PROVISION OF 450ml "buddy" REFRESHMENTS DURING A 3-MONTH ELECTION CAMPAIGN Tender number: 01/02ecr/2019 Tenders are invited for the provision of 5 000 packed cases of refreshments, with each packed case consisting of a half-dozen buddy's of the traditional cola soft-drinks. An electronic version of this tender request is available from the following website. https://dfal/tender01/02ecr/2019.org.zar All tenders must be submitted electronically at the above web address or placed in the tender box (located at the DFAL headquarters) no later than 16h00 (CAT) on 31 July 2019. Tenders with incomplete document(s) will not be considered. Enquiries to: Marc "Leadership" Brown: 015 114 456 or 080 123 45678 or leadership@dfal.org.zar The following three (3) key specific tender requirements were provided by Mr. Marc Brown: (1) All the soft-drinks to be delivered must be branded with the DFAL's official emblem and slogan. (ii) The winning company must commit to employ at least ten (10) youths for the entire duration of the election campaign. If at least ten (10) youths are employed, DFAL will subsidise their stipend at R3 500 per youth per month. If less than ten (10) youths are employed, the R3 500 subsidy will be reduced by 65%. The subsidy will take effect for the full duration of the election campaign. (ii) All the related distribution costs will be bome by DFAL If SM were to tender for the DFAL's request, the following information would be applicable: A high-speed soft-drink bottling plant with a useful life of 5 years must be bought. The plant's cost of R1 500 000 will be fully financed by a loan from Ned-Tec Bank at an interest rate of 7,75% per annum. Although the plant will be sold immediately at the end of the election campaign, the Ned- Tec Bank loan will only be repaid in three years' time. At the end of the election campaign, the book value and the resale value of the plant are expected to be R1 425 000 and R1 480 000, respectively. SM's plants are depreciated on the straight-line basis over their useful life. (ii) Affixing the DFAL's emblem and slogan will cost SM RO,50 per unit of "buddy". ili) SM will employ eight (8) youths at R4 000 per month per youth for the duration of the election campaign. (iv) Each applicable unit variable cost is expected to increase by 5% from the 2019 financial year budgeted level. v) The maximum "buddy" units that can be manufactured during the 2020 financial year is 2 200 000. This is equivalent to the budgeted annual sales units in the main market. DFAL is not part of SM's main market. vi) Expected contributions on sales to external customers (main market) of FizzyCola for "can", "buddy" and "jumbo" are R3,95 per unit, R4,20 per unit and R1,55 per unit, respectively. (vii) SM's mark-up on similar tenders is 35% on total relevant cost(s) of the tender. [TURN OVER] MAC3701/Assignment02/1/2020 QUESTION 1 (continued) REQUIRED For each question below, remember to: Clearly show all your calculations in detail; Where necessary, indicate irrelevant amounts/adjustments with a RO (nil-value); Round all your workings to two decimals, except where otherwise stated; Ignore all the taxation implications. (a) Comment on whether or not the available prepared water would have been sufficient for SM to fully meet its 2019 financial year manufacturing budget for all units of both product types. Support your commentary with necessary and relevant calculations. Where applicable, round your calculations to the nearest litre/millilitre (6) ( b ) For question (b) only, assume that for the 2019 financial year, the budgeted required after- loss prepared water for the "buddy's" is 1 089 000 litres, however only 1 008 000 litres after-loss are available for the "buddy's". Calculate SM's 2019 financial year budgeted optimal manufacturing mix per product type for the "buddy" packaging variation only. Where applicable, round your calculations to three (3) decimal places. (11) (c) In answering question (c) only, assume the following two (2) points: 1. Budgeted contributions per unit for the FizzyOrange are as follows: Product type FizzyOrange Packaging variations Can Buddy Jumbo Contribution per unit R3,60 R4,30 R1,50 2. Ignore the implications of opening and closing inventory. (i) Calculate SM's budgeted contribution value at break-even point for FizzyOrange's "cans" packaging variation only for the 2019 financial year. (8) (ii) Calculate the FizzyOrange sales mix variance for the "jumbo" packaging variation only for the 2019 financial year. ( 2 ) (d) Assume that the proposal to implement EOQ is accepted. Calculate the number of fabric sacks per order, which MSM will need and use to package the supply of SM's budgeted sugar requirements for all the budgeted manufacturing units of the "FizzyCola" product type, during the 2020 financial year. (8) (e) |Upon your enquiry as SM's Chief Financial Officer, Mr. Marc Brown said this to you: myLeader, I hope your phone is not tapped. Between me and you, DFAL's NFE has officially approved the "buddy" tender price at R650 000. I know you will work your magic on the numbers for SM to tender way below the R650 000. After bagging this one, me and you will definitely get our "smaller-nyana" share of the "facilitation fee". (1) As a CA (SA), identify four (4) ethical dilemmas apparent from your telephonic enquiry with Mr. Marc Brown that could potentially threaten your professional integrity. (4) (il) From a quantitative perspective only, advise SM if it should tender for the "DFAL" request or not. Motivate your advice with relevant and necessary calculations. (11) Total question 1 [50]