QUESTION $4$

$(20$ Marks$)$

REQUIRED

Use the information given below to prepare the following for the first three months of operations $($i$.$e$.$ January, February and March $2025)$:

$4\mathrm{.}1$

Debtors Collection Schedule

$(6$ marks$)$

$4\mathrm{.}2$

Cash Budget

$(14$ marks$)$

INFORMATION

The following information relates to Crompton Manufacturers which will commence business on $01$ January $2025$ with a capital contribution of R$400000$ cash:

$1.$

A loan of R$200000$ is expected to be obtained from Len Bank on at the start of January $2025.$ A repayment of R$5000$ per month plus interest at a rate of $12\%$ per year will be paid at the end of each month, commencing January $2025.$

$2.$

New machinery and equipment will be purchased on $02$ January $2025$ for R$180000.$ A deposit of $20\%$ will be paid immediately. The balance of the debt as well as finance charges of R$16000$ will be paid in $10$ equal monthly instalments commencing February $2025.$

$3.$

Estimated production and sales are as follows:

Production $($units$)$

Sales $($units$)$

January

$4000$

$3000$

February

$10000$

$9000$

March

$14000$

$12000$

April

$17000$

$14000$

$$

$$

Question $3$

REQUIRED

Use the information given below to answer each of the following questions independently:

$3\mathrm{.}1$

How many units must Pentel Limited sell to break even?

$(4$ marks$)$

$3\mathrm{.}2$

Calculate the margin of safety $($in rands$).$

$(4$ marks$)$

$3\mathrm{.}3$

Use the marginal income ratio to determine the sales value required to achieve a net profit of R$720000.$

$(4$ marks$)$

$3\mathrm{.}4$

Based on the expected sales volume of $12000$ units, determine the sales price per unit $($expressed to the nearest cent$)$ that will allow the company to break even.

$(4$ marks$)$

$3\mathrm{.}5$

Suppose Pentel Limited decides to advertise the product heavily and set the sales price at R$160$ and the sales commission at $15\%$ of sales. If a further R$40000$ is spent on advertising and the sales increases to $13000$ units, calculate the total Marginal Income and Net Profit$/$Loss$.$

$(4$ marks$)$

INFORMATION

Pentel Limited is applying CVP analysis to a new product that it plans to manufacture. The following data, based on expected sales of $12000$ units, are provided for analysis:

Variable manufacturing costs

R$936000$

Fixed manufacturing costs

R$390000$

Sales commission $($calculated at $12\%$ of sales$)$

R$216000$

Fixed administrative and marketing costs

R$96000$

Sales

R$1800000$

$$