QUESTION 2 (25 Marks) INFORMATION

Valpre Limited plans to manufacture bar fridges and the following information is applicable:

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 (2)

\begin{tabular}{|l|c|} \hline Estimated sales for the year & 10000 units at R6 800 each \\ \hline Estimated costs for the year: & \\ \hline Variable costs & R1 040 per unit \\ \hline Direct Material & R700 per unit \\ \hline Direct Labour & R220 per unit \\ \hline Variable Manufacturing Cost & 10% of selling price per unit sold \\ \hline Selling expenses & R875000 \\ \hline & R786 000 \\ \hline Factory overheads (all fixed) & \\ \hline Administrative expenses (all fixed) & \\ \hline \end{tabular}