Question: Study the information given below and answer the following questions independently INFORMATION: Banco Limited produces a single product. The following budgeted information for 2021 is
Study the information given below and answer the following questions independentlyINFORMATION:
Banco Limited produces a single product. The following budgeted information for 2021 is made available:
| Variable manufacturing costs per unit | R85.24 |
| Selling price per unit | R246 |
| Fixed manufacturing costs | R4 552 000 |
| Marketing Costs | R648 000 plus 6% of sales |
| Administration costs | R320 000 plus R8 per unit sold |
The number of units expected to be produced and sold during 2021 is 45 000.
| 4.1.1Calculate the expected break- even quantity for 2021 | (6 marks) |
| 4.1.2Calculate the sales volume required to achieve an operating profit of R2 4848 000 | (6 marks) |
4.1.3Suppose Banco Limited is considering a decrease of R18 per unit in the selling price of the product, With the expectation that this would increase the sales volume by 10%. Is this a good idea? Motivate your answer | (6 marks) |
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