Question: Ramapho SA(ltd) mining results Sales . . . . . . . . . . . . . . . . . . . .

Ramapho SA(ltd) mining results

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R2,000,000

Variable expenses . . . . . . . . . . . . . . . . . . . . . . . . 786,000

Contribution margin . . . . . . . . . . . . . . . . . . . . . . . 1214,000

Fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1250,000

Net operating income (loss) . . . . . . . . . . . . . . . . R (36,000)

Area

Mpumalanga Gauteng Northwest

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R 500,000 R 800,000 R 700,000

Variable expenses as a percentage of sales . . . . . . . . . 30% 32% 40%

Traceable fixed expenses . . . . . . . . . . . . . . . . . . . . . R 270,000 R 350,000 R 200,000

The scares resource that drives sales in all the areas are the machine-hours available. To generate R1000 of sales requires one machine-hour. Which area should the company prioritise in the employment of more machine hours to increase their profits?

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