A friend of yours is selling handcrafted objects at craft markets in your hometown. He requested...

 

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A friend of yours is selling handcrafted objects at craft markets in your hometown. He requested your assistance in determining whether it will be possible to have a more profitable business. You undertook an investigation and found his variable cost to be R20 each. The selling price of the objects is R50. The cost of renting a booth at the craft market is R150. He further informed you that he is attempting to identify a new supplier that will reduce his variable cost of production to R15 per unit. Assisting him you are required to: 1.1 Calculate the break-even point for the existing position. (7) 1.2 If the negotiations for a new supplier are successful, calculate the new break-even point. (7) A friend of yours is selling handcrafted objects at craft markets in your hometown. He requested your assistance in determining whether it will be possible to have a more profitable business. You undertook an investigation and found his variable cost to be R20 each. The selling price of the objects is R50. The cost of renting a booth at the craft market is R150. He further informed you that he is attempting to identify a new supplier that will reduce his variable cost of production to R15 per unit. Assisting him you are required to: 1.1 Calculate the break-even point for the existing position. (7) 1.2 If the negotiations for a new supplier are successful, calculate the new break-even point. (7)

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Answer Answer a Given that Fixed cost R150 Selling Price R50 Variable Cost R20 Formula used ... View the full answer