Galez Pty Ltd are considering starting production of a new product. The selling price of the new product is R120 per unit excluding VAT. The variable costs are made up as follows: materials R55, direct labour R20, and utilities R10 per product manufactured. Commission of 2,5% will be paid to the business development consultant responsible for sales. Fixed costs are made up as follows: rental R6 000, salaries R10 000, and insurance of R2 000 per month. The business estimates that it will produce and sell 12 000 units of this product per month.

A. How many units need to be sold for Galez to break even? Show all your workings. (10) B. Calculate the sales revenue at the break-even point. (5) C. If all the fixed costs increase by 10% and variable costs increase by 15%, what will the revised number of units for break-even be? Please show all your workings. (5)