Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Deshi Industries plans to manufacture gas stoves and the following information is applicable: Estimated sales for the year 3 0 0 0 units at R

Deshi Industries plans to manufacture gas stoves and the following information is applicable:
Estimated sales for the year 3000 units at R 450 each
Estimated costs for the year:
Variable costs R320 per unit
Factory overheads (all fixed) R80000
Administrative expenses (all fixed) R30000
1.1 Calculate the:
1.1.1 Total operating profit for the estimated figures.
1.1.2 Break-even quantity
1.1.3 Break-even value
1.1.4 Margin of safety in units.
1.1.5 Target sales volume to achieve a profit of R50000.
1.2 The sales manager is of the opinion that a greater profit will be made if the selling price is decreased by 10% as sales volume will then increase by 10%. Calculate the total operating profit at the new selling price and advice management whether to implement this suggestion. (4)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Statement Analysis and Security Valuation

Authors: Stephen Penman

5th edition

78025311, 978-0078025310

More Books

Students also viewed these Accounting questions

Question

Explain the difference between an expenditure and an encumbrance.

Answered: 1 week ago