(20) QUESTION 4 Exxarro Llimited is considering pricing and costing for the year ahead. The following data based on expected production and sales of 15 000 units are provided for analysis: Variable manufacturing cost Fixed manufacturing cost Sales commission Fixed administration cost Sales R1 185 000 R510 000 R5 per unit sold R130 000 R210 per unit Study the information provided above and answer the following questions independently: 4.1 Calculate the break-even sales value. (5) 4.2 Calculate the sales volume required to achieve a profit of R 800 000. (5) 4.3 Suppose Exxaro Limited is considering a decrease of 10% per unit in the selling price of the product with the expectation that it would increase sales volume by 10%. Is this a good idea? Motivate your answer with relevant calculations. (10) QUESTION 5 (20) 5.1 Study the extracts of the Cash Flow Statement of Conlog Limited for the year ended 31 December 2020 and answer the following: 5.1.1 What do you understand by "Cash flow from operating activities R 150 000"? (4) 5.1.2 Name three transactions that improve cash flow but do not increase profit. (6) 5.1.3 There is a combination of a positive net cash flow from operating activities and a negative cash flow from investing activities. Is this good for the company? Explain. (5) INFORMATION: Conlog Limited Extracts of Cash Flow Statement for the year ended 31 December 2020 Cash flow from operating activities Cash flow from investing activities Additions to plant and machinery Cash flow from financing activities Increase in long term borrowings R 210 000 (330 000) (330 000) 120 000 120 000 5.2 Calculate the incremental profit/loss after tax. (5) INFORMATION: Lubners Traders is considering extending credit to some customers who may be at risk of defaulting in payment. Sales will increase by R200 000 if credit is granted to these customers. From the new accounts receivable generated, 8% is expected to be uncollectable. Additional collection costs will be 3% of sales, and the production and selling costs will be 65% of sales. Taxation is 28%. 90 (20) QUESTION 4 Exxarro Llimited is considering pricing and costing for the year ahead. The following data based on expected production and sales of 15 000 units are provided for analysis: Variable manufacturing cost Fixed manufacturing cost Sales commission Fixed administration cost Sales R1 185 000 R510 000 R5 per unit sold R130 000 R210 per unit Study the information provided above and answer the following questions independently: 4.1 Calculate the break-even sales value. (5) 4.2 Calculate the sales volume required to achieve a profit of R 800 000. (5) 4.3 Suppose Exxaro Limited is considering a decrease of 10% per unit in the selling price of the product with the expectation that it would increase sales volume by 10%. Is this a good idea? Motivate your answer with relevant calculations. (10) QUESTION 5 (20) 5.1 Study the extracts of the Cash Flow Statement of Conlog Limited for the year ended 31 December 2020 and answer the following: 5.1.1 What do you understand by "Cash flow from operating activities R 150 000"? (4) 5.1.2 Name three transactions that improve cash flow but do not increase profit. (6) 5.1.3 There is a combination of a positive net cash flow from operating activities and a negative cash flow from investing activities. Is this good for the company? Explain. (5) INFORMATION: Conlog Limited Extracts of Cash Flow Statement for the year ended 31 December 2020 Cash flow from operating activities Cash flow from investing activities Additions to plant and machinery Cash flow from financing activities Increase in long term borrowings R 210 000 (330 000) (330 000) 120 000 120 000 5.2 Calculate the incremental profit/loss after tax. (5) INFORMATION: Lubners Traders is considering extending credit to some customers who may be at risk of defaulting in payment. Sales will increase by R200 000 if credit is granted to these customers. From the new accounts receivable generated, 8% is expected to be uncollectable. Additional collection costs will be 3% of sales, and the production and selling costs will be 65% of sales. Taxation is 28%. 90