QUESTION 2 (25 Marks) INFORMATION Valpre Limited plans to manufacture bar fridges and the following information is applicable: :

Estimated sales for the year10 000 units at R6 800 each Estimated costs for the year: Variable costs Direct Material R1 040 per unit Direct Labour R700 per unit Variable Manufacturing Cost R220 per unit Selling expenses 10% of selling price per unit sold Factory overheads (all fixed) R875 000 Administrative expenses (all fixed) R786 000

REQUIRED:

2.1 Calculate the total net profit for the estimated figures. (4)

2.2 Calculate the break-even quantity (4)

2.3 Calculate the break-even value (3)

2.4 Calculate the break-even value using the marginal income ratio. (4)

2.5 Calculate the target sales volume to achieve a profit of R1 841 000. (4)

2.6 Calculate the new break-even quantity and value if the selling price is increased by 15% (4)

2.7 Calculate the margin of safety in units at the original budgeted volume and price