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kindly show the calculations so that i can under stand QUESTION TWO [30] Eating Excellence (Pty) Ltd. manufactures two different stainless steel kitchen apparatus, namely

image text in transcribedimage text in transcribedkindly show the calculations so that i can under stand

QUESTION TWO [30] Eating Excellence (Pty) Ltd. manufactures two different stainless steel kitchen apparatus, namely Mixer and Fixer. The products are sold to retailers, who resell the products to their own customers. The management accountant is busy preparing the monthly budget for the next financial year. The company's metal-moulding machine's capacity is limited to 480 hours per month. All the other machines have unused capacity and the other resources are readily available. The sales manager has indicated that she can potentially sell 2 000 units of product Mixer (requiring 400 machine hours to produce) and 3 000 units of product Fixer (requiring 150 machine hours to produce) per month to a variety of customers. The budgeted information per unit for each product is as follows: Mixer Fixer Selling price 100 80 Raw material Variable conversion costs 30 30 Fixed conversion costs(excl. depreciation) 15 8 Depreciation 10 15 Absorption profit per unit 25 7 20 20 Required: 2.1. Determine the number of monthly sales units per product (sales mix) that should be budgeted for the coming financial year in order to maximise the profit. Then calculate the budgeted total monthly contribution that will be derived from this optimum mix. (14) 2.2. During the year, the company is approached by a potential new customer who requires 200 units of Fixer (this potential sale is additional to the originally estimated potential sale of 3 000 units of Fixer). The customer is prepared to pay R70 per unit for a one-time order. Assume for this part of the question that, if a once-off order is accepted, the company will not be able to decrease the regular sales units of Fixer below 3 000 per month without losing all the regular business relating to Fixer. Determine the mini- mum price per unit that Eating Excellence (Pty) Ltd. can accept from the potential new customer. (10) 2.3. Should the additional order referred to in 1.1. above be accepted on a purely quantitative basis? Explain your answer. (2) 2.4. Assuming that the offer of R70 per unit is accepted, indicate why choosing to sell to the once-off customer might have a negative effect on existing customers' perception of the company's loyalty to them. (4)

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