QUESTION $2$

$2\mathrm{.}1$ REQUIRED

Study the information provided below and answer the following questions:

$2\mathrm{.}1\mathrm{.}1$ Calculate the net profitloss that Grumpy Limited would make without the special order.

$2\mathrm{.}1\mathrm{.}2$ Does Grumpy Limited have spare capacity to accept the special order? Motivate your

answer.

$2\mathrm{.}1\mathrm{.}3$ Determine whether the company should accept the special order. Show all the relevant

calculations.

INFORMATION

Grumpy Limited expects to manufacture and sell $208000$ units during $2015,$ using $80\%$ of its normal

capacity. The variable manufacturing costs amount to R$8$ per unit. The selling price per unit is R$20.$

Variable marketing costs are R$1$ per unit. The fixed manufacturing overheads amount to R$1040000.$

Fixed marketing and administrative expenses total R$780000.$

A customer has offered to pay R$12$ per unit for an additional $50000$ units.

$2\mathrm{.}2$ REQUIRED

Prepare a Pro Forma Statement of Comprehensive Income for the year ended $31$ December

The statement must include the gross profit, operating profit, profit before tax and profit

after tax.

INFORMATION

The following figures have been extracted from the Statement of Comprehensive Income of Munroe

Limited for the year ended $31$ December $2014$:

Additional information

The sales forecast for the year ended $31$ December $2015$ is R$800000.$

Munroe Limited uses the percentage$-$of$-$sales method to prepare its Pro Forma Statement of

Comprehensive Income.

Munroe Limited has identified cost of sales, operating expenses and interest expense as varying in

proportion to sales.