Exxarro Limited is considering pricing and costing for the year ahead. The following data based on expected
Question:
Exxarro Limited is considering pricing and costing for the year ahead. The following data based on expected production and sales of 15 000 units are provided for analysis: Variable manufacturing cost R1 185 000 Fixed manufacturing cost R510 000 Sales commission R5 per unit sold Fixed administration cost R130 000 Sales R210 per unit Study the information provided above and answer the following questions independently:
4.1 Calculate the break-even sales value.
4.2 Calculate the sales volume required to achieve a profit of R 800 000.
4.3 Suppose Exxaro Limited is considering a decrease of 10% per unit in the selling price of the product with the expectation that it would increase sales volume by 10%. Is this a good idea? Motivate your answer with relevant calculations.
QUESTION 5
5.1 Study the extracts of the Cash Flow Statement of Conlog Limited for the year ended 31 December 2020 and answer the following:
5.1.1 What do you understand by “Cash flow from operating activities R 150 000”?
5.1.2 Name three transactions that improve cash flow but do not increase profit.
5.1.3 There is a combination of a positive net cash flow from operating activities and a negative cash flow from investing activities. Is this good for the company? Explain.
