FACULTY OF COMMERCE, MANAGEMENT AND LAW Assignment Questions AAM3781 2022 Assignment questions Assignment 1 Question 1 (20 marks) ABC Namibia is a company that produces various products used for swimming by children. Through research and development, they have produced an exciting product that they want to launch. The product will be priced at N$3 per unit. The production of this product will not bring any capacity constraints if the company produces 30 000 units per month of this product. Incremental costs to produce one unit of the product are N$1.25 and the fixed overheads are estimated to be N$35 000. From a recent market research conducted, results indicate that the customers may demand more than 30 000 units of the product. ABC Namibia is taxed at 30%. Marks Required Sub Total total 1.1 Calculate the break-even point (BEP) per month for the new product in units 4 4 and in total sales revenue. If ABC targets a monthly profit of N$12 250 after tax, calculate the sales units 1.2 required and the sales revenue that should be generated to meet the target 5 9 profit. Assuming that additional capacity can be obtained from XYZ Company at a 1.3 rental fee of N$1 000 monthly and variable cost of the rented capacity will be 6 15 N$0.15 per unit higher than their current level. Calculate the number of units to be sold per month if the company wants a profit of N$24 500 before tax. In order to boost sales, the management are proposing a commission of 1.4 N$0.10 per unit sold above the BP to be paid to the sales executives. 5 20 Calculate how many units should be sold in order to earn a pre-tax profit of N$9 900? Total 20