This is individual work, and you must reference your textbook in each of your answers.

The textbook is the only source need to be referenced.

Question $1(25$ marks$)$

Read the following scenario and then answer the questions that follow:

An organic food company is seeking your financial insights to assess their current financial standing. As part of their expansion plans, they are wanting to launch a new line of organic fruit juices, and have provided you with the following data:

$-$ Anticipated selling price for each $1-$liter organic fruit juice bottle: R$45$

$-$ Material costs for each $1-$liter bottle: R$10$

$-$ Monthly rent for production facilities: R$15000$

$-$ Monthly salaries for employees: R$20000$

The company has a healthy bank balance and numerous pre$-$orders from customers but is worried about their liquidity position as they owe a considerable amount to their suppliers of organic fruits and packaging. The following figures apply:

$-$ Current assets: R$550000$

$-$ Non$-$current assets: R$800000$

$-$ Current liabilities: R$450000$

$-$ Non$-$current liabilities: R$600000$

$-$ Inventory holdings: R$155000$

Note: Include calculation workings and an analysis of your findings in your answers.

$1\mathrm{.}1$ Conduct a breakeven analysis to determine the number of fruit juice bottles the business must sell in order to breakeven. Analyse your findings, including how the business can lower the breakeven point. $(8)$

$1\mathrm{.}2$ Use the acid test ratio to evaluate the manufacturer's liquidity position. $(7)$

$1\mathrm{.}3$ Compare current liabilities and current assets with examples from the scenario. $(10)$