Solution to Question No: ;3
Tha data is given as follows:
Sales = 40,000 units
Selling Price(SP) = R140 each
Sales Value(SV) =(40,000x140)= 56,00,000
Variable costs(VC):
Direct material = 72 per unit
Direct labor= 12 per unit
Selling expenses= (140x30%)= 42 per unit
VC per unit = 126 per unit
Total Variable cost= (40000x126)=50,40,000
Contribution = 56,00,000-50,40,000= 560,000
Fixed cost (FC):
Factory overheads = 110,000
Administration exps = 180,000
Total FC = 290,000
3.1: Break even Quantity:
= (FC/Contribution per unit)
Contribution per unit = SP-VC = 140-126 =14
=(290,000/14) = 20714.28
= 20714 units
3.2: Break Even Value:
= (FC x SV)/(Contribution)
=(290,000 x 56,00,000)/560,000
=29,00,000
OR
= Break even units X Selling price per unit
= 20714 x 140 = 28,99,960 = 29,00,000
3.3: Break even quantity, if the direct labor cost increased by R2 per unit :
So the new variable cost will be = 126+2 =128 per unit
New BEP quantity:
= (FC/Contribution per unit)
Contribution per unit = SP-VC = 140-128 =12
=(290,000/12) = 24166.66
= 24167 units
3.4: Selling price per unit, if the profit per unit R12
Profit = Contribution per unit - FC per unit
(Fixed cost per unit =Total FC/Units= 290,000/40000=7.25)
12 = Contribution per unit - 7.25
Contribution per unit= 12+7.25 = 19.25
We know that Original Contibution margin is 10% (Contribution/SP =14/140=10%)
So new selling price will be = 19.25 x 10 = 192.5
3.5: New Break even quantity and value , if the selling price increased by 5%
New Selling price = 140+5% = 147 per unit
New Variable costs(VC):
Direct material = 72 per unit
Direct labor= 12 per unit
Selling expenses= (147x30%)= 44.1 per unit
VC per unit = 128.1 per unit
New Contribution = 147 - 128.1 = 18.9
Break even Quantity:
= (FC/Contribution per unit)
=(290,000/18.9) = 15343.91
= 15344 units
Break Even Value:
= Break even units X Selling price per unit
= 15344 x 147 = 22,55,568
DOLL 58 MANCOSA: POSTGRADUATE DIPLOMA IN BUSINESS MANAGEMENT DUE DATE: 26 AUGUST 2019 ASSESSMENT 5 CCOUN...
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