Calculate the following from the information given below:

3.1.1 Total marginal income and net profit/loss. (4)

3.1.2 Break-even quantity. (4)

3.1.3 Total marginal income, if the selling price is reduced by R20 per unit. (4)

3.1.4 Break-even quantity, if the selling price is reduced by R20 per unit. (4)

INFORMATION

The following per unit projected data for a product that is the output of Project M is provided below:

Selling price R200

Direct materials R70

Direct labour R30

Variable manufacturing overheads R20

Fixed manufacturing overheads are expected to amount to R280 00. Projected administration and marketing costs comprise the following: Fixed costs, R200 000 Sales commission of 10%. Expected production and sales volume are 10 000 units. 3.2 REQUIRED Use the information provided below to answer the following questions: 3.2.1 If advertising costs are reduced by R20 000 and selling price is reduced by 10%, calculate the sales value required to break even. (4) 3.2.2 Determine the effect that the decrease in advertising costs and selling price (see question 3.2.1) would have on the net profit, if the sales volume increases by 5 000 units. (5)

INFORMATION The following budgeted information for the year ended 31 July 2016 is available for a product from Project H: Sales (30 000 units X R40 per unit) R1 200 000 Total variable costs (30 000 units X R18 per unit) R540 000 Total fixed costs R200 000