DADDY T has appointed a new warehouse manager to assist with the re-organising of their infrastructure to increase their competitiveness. The firms financial statements for 2020 showed the following:

Excerpt from the 2020 Financial Statements of DADDY T Distributors:

Annual sales turnover R50 million Fixed assets R15 million Inventory R 5 million Debtors R 3 million Creditors R 5 million Cash in bank R 1 million Petty cash R 500 000 Purchases R 25 million Other operating costs R 5 million Cost of materials 50% of cost of sales

Using the above information, calculate the following for SAMAs Distributors:

Round all calculations to 2 decimal places.

(a) Profit margin (b) Asset turnover rate (c) Return on investment (d) Assuming a 5% reduction in material costs, what will the increase in profit be? (e) If the same profit increase as in (d) were to be generated by increasing sales, what increase in Rand would be required? Use the existing profit margin in your calculation.

Calculate the following for DADDY Ts Distributors should the new manager and his team be able to reduce purchasing costs by 2% and decrease their inventory holding by 5%. (Use the amounts from SAMAs financial statements again).

(a) Purchasing costs (b) Total operating costs (c) Profit margin (d) Asset turnover rate (e) Return on investment

(f)You are the manager of ABC and want to know at what units will the company break-even. Calculate the break-even point in units if the total fixed cost is R1 000 000. The selling price is R150 per unit and the variable cost per unit is R40. Provide the equation.