6 of 25 5 HMAC330-1-Jul-Dec2021-SA1-BL- V4-03122021 QUESTION 2 (17 marks) Read the following scenario and answer the question that follows: Sunshine Suppliers Ltd ("Sunshine Suppliers") manufactures two products, product X and product Y. The selling price, normal production levels and totals costs are as follow: Product Y 30 Product X Selling price per unit 25 (Rands) Normal production 12 000 (80% capacity) levels Total costs (Rands) 210 000 15 000 (75% capacity) 2 000 Variable costs are 40% of total costs for both products. A prospective customer has approached the entity and wishes to place an order of 2 600 units of product X if the entity is willing to lower its selling price to R20 per unit. Required: Evaluate whether Sunshine Suppliers Ltd. should accept the special order by determining the incremental revenue and costs and change in profit as a result of the special order. (17 marks) Competency Framework Reference: VI-4.1 Identifies and evaluates financial information relevant to business decisions Identifies financial information that is relevant to decision making Determines the financial impact of business decisions, such as - special orders adding / dropping parts of an operation Considers capacity utilisation and the implications of the existence of constraints, the applicability of contribution per limiting factor, the applicability of linear programming, and the inter-relationship between constraints where more than one constraint exists 6 HMAC330-1-Jul-Dec2021-SA1-BL- V4-03122021 6 of 25 5 HMAC330-1-Jul-Dec2021-SA1-BL- V4-03122021 QUESTION 2 (17 marks) Read the following scenario and answer the question that follows: Sunshine Suppliers Ltd ("Sunshine Suppliers") manufactures two products, product X and product Y. The selling price, normal production levels and totals costs are as follow: Product Y 30 Product X Selling price per unit 25 (Rands) Normal production 12 000 (80% capacity) levels Total costs (Rands) 210 000 15 000 (75% capacity) 2 000 Variable costs are 40% of total costs for both products. A prospective customer has approached the entity and wishes to place an order of 2 600 units of product X if the entity is willing to lower its selling price to R20 per unit. Required: Evaluate whether Sunshine Suppliers Ltd. should accept the special order by determining the incremental revenue and costs and change in profit as a result of the special order. (17 marks) Competency Framework Reference: VI-4.1 Identifies and evaluates financial information relevant to business decisions Identifies financial information that is relevant to decision making Determines the financial impact of business decisions, such as - special orders adding / dropping parts of an operation Considers capacity utilisation and the implications of the existence of constraints, the applicability of contribution per limiting factor, the applicability of linear programming, and the inter-relationship between constraints where more than one constraint exists 6 HMAC330-1-Jul-Dec2021-SA1-BL- V4-03122021