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7.3 Buffy Limited manufactures and sells a single product. Buffy invested A100000 in the business and strives for a return on investment of 25%. Buffy
"7.3 Buffy Limited manufactures and sells a single product. Buffy invested A100000 in the business and strives for a return on investment of 25%. Buffy intends not to keep any inventory. The following data are available: Direct material per unit Total direct labour cost Variable manufacturing overheads per unit R12.50 R20 000.00 Units produced R1.50 Total fixed manufacturing overheads 1000 Total fixed administration overheads R30 000.00 Commission per unit sold R15 000.00 Sales price per unit 5% R40.00 (a) Calculate the number of units Buffy Limited should sell to achieve the desired return on investment. (b) Determine the number of units to be sold to achieve the desired retum on in-vestment if Buffy Limited decides to decrease commission on sales to 3%. The decrease of the commission will have the effect of increasing fixed administra-tion overheads by 10%. "7.3 Buffy Limited manufactures and sells a single product. Buffy invested A100000 in the business and strives for a return on investment of 25%. Buffy intends not to keep any inventory. The following data are available: Direct material per unit Total direct labour cost Variable manufacturing overheads per unit R12.50 R20 000.00 Units produced R1.50 Total fixed manufacturing overheads 1000 Total fixed administration overheads R30 000.00 Commission per unit sold R15 000.00 Sales price per unit 5% R40.00 (a) Calculate the number of units Buffy Limited should sell to achieve the desired return on investment. (b) Determine the number of units to be sold to achieve the desired retum on in-vestment if Buffy Limited decides to decrease commission on sales to 3%. The decrease of the commission will have the effect of increasing fixed administra-tion overheads by 10%
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