3:(10 marks cost based plus approach) JJ Cc is a family company that specialises in producing air freshener for home use and office use. The company has just developed a new product called "cool breeze" which will provide a competitive advantage over it is rivals. The finance director has asked you to assist in preparing some financial information for use at the next meeting. The following costs budget has been estimated based on forecast sales of 6 000 units: Direct materials Direct labour Manufacturing overheads Total manufacturing cost Selling and administrative cost Total costs N$ 180 000 100 000 140 000 420 000 105 000 525 000 Manufacturing overheads are absorbed on the basis of 50% of direct costs and 20% of the manufacturing overhead is variable. Selling and administrative costs are based on 25% of total manufacturing cost and do not vary with the level of activity. Halfway through the budget period it became evident that this estimate results in higher prices charged to customers and the management accountant has revised the estimated units to be sold to increase it to 7 000 units in order that the price charged will be reduced to attract customers. Other relevant information are given below: Property, plant and equipment Inventory Debtors Cash N$ 250 000 30 000 60 000 10 000 JJ Cc requires a profit of N$70 000 on investment. REQUIRED 3.1. Assume that the board of director has approved the revised estimate of 7 000 units and the firm uses cost-plus pricing (round ALL answers to two decimals). Marks a) Calculate the mark-up and selling price based on variable cost at 7 000 units b) Calculate the mark-up and selling price based on total manufacturing at 7 000 units c) Calculate the mark-up and selling price based on total cost at 7 000 units 6 2 TOTAL MARKS 20 10