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Mvete Limited is an established company in the manufacturing industry. The company is manufacturing a very successful product, namely Vete12. The following cost structure

Mvete Limited is an established company in the manufacturing industry. The company is manufacturing a very successful product, namely Vete12. The following cost structure is given to you, the newly appointed Traince Cost Accountant, to advise management on the different levels of production: At the current level of 15 000 units produced and sold: Direct material R20 per unit R375 000 Direct labour Indirect material R5 per unit Indirect labour (includes the production supervisors' salary of R240 000. The remainder is R5.50 per unit R352 500 Other manufacturing overheads (all variable) Depreciation charge PPE (production plant and machinery) Selling and administrative expenses: Variable selling expenses Fixed selling expenses Administrative expenses (all fixed) R12.50 per unit R375 000 R10.25 per unit R5 per unit R7 per unit Required a) Calculate at the three (3) different production levels of: 15 000 units (current level of production) 20 000 units, 12 000 units i. The variable manufacturing cost per unit, ii. The fixed manufacturing cost per unit, iii. The total manufacturing cost per unit. b) Why is there a difference in the unit cost? Discuss briefly c) Assume the company produces and sell 20 000 units, and wishes to make a net profit of R10 per unit. What would be the expected selling price per unit? (6) (3) (1) (2) (5)

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