QUESTION FIVE $[20]$

Power Ltd manufactures and sells a single product. They have recently acquired a new machine and

the budgeted monthly information for the $2024$ financial year is as follows:

Sales per month $7000$ units

Selling price per unit R$50$

Variable manufacturing costs per unit R$20$

Variable selling costs $15\%$ of sales

Fixed costs per month R$151875$

Initial investment R$2000000$

$5\mathrm{.}1$ What is the monthly breakeven point in units and in value? $(5)$

$5\mathrm{.}2$ How many units must be sold in the year if the company wishes to earn $10\%$ net profit per unit

on the initial investment? $(3)$

$5\mathrm{.}3$ Using the figures for the year, assume that there is an increase of $20\%$ in fixed costs and a

R$7\mathrm{.}50$ increase in the price unit. Calculate the margin of safety value in units for the year. $(5)$

$5\mathrm{.}4$ Determine the selling price per unit that will enable Power Ltd to achieve a monthly operating

profit of R$40000.(7)$