Question: Please help with this 15 mark question. QUESTION 1: [15 MARKS] Text Craft Ltd is analysing a proposed project with the following income and costs
QUESTION 1: [15 MARKS] Text Craft Ltd is analysing a proposed project with the following income and costs characteristics. The depreciation expense amounts to R10 000. There will be no salvage value. The tax rate is 28%. BASE CASE UPPER BOUND LOWER BOUND 15 000 Unit sales Price per unit 16 000 R14.00 R 7.00 R10.00 R6.50 17 000 R18.00 R7.50 Variable cost per unit Fixed costs R26 000 R25 000 R27 000 1.1 Complete the following pro forma statement of profit/loss (income statement) for Text Craft Ltd. [7] BASE CASE BEST CASE WORST CASE R R R Sales 224 000 (26) Variable costs 112 000 (16) D () Fixed costs 26 000 (1) (15) D Depreciation 10 000 (15) (1) 10 PBIT 76 000 (5). D (%) Tax (28%) 21 280 (1) m) (%) NPAT 54 720 (15) a) (3) 1.2 Calculate the operating cash flow (OCF) for both the worst and best cases. Provide your final answer only [3] 1.2.1 Worst Case (1%) 1.2.2 Best Case (1) 1.3 Calculate the degree of operating leverage (DOL) for both the worst and best scenarios. Provide your final answer only [3] 1.3.1 Worst Case (1%) 1.3.2 Best Case (1%) 1.4 Calculate the accounting break-even point under the best-case scenario. Provide your final answer only [2] 1.4.1 Best Case a) b) c) d) e) D g) (5))
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