Question 2.1

ABC (Pty) Ltd manufactures and sells a single type of product. The company has recently completed its draft budget (see income statement below). Management, however, have requested additional information for the upcoming strategy meeting. You have been appointed as a consultant to ABC (Pty) Ltd and have been requested to review the attached income statement and provide the following:

Required:

a) The companys breakeven quantity and value.

b) The companys sales quantity if the company would like to deliver a net profit before tax of R250 000 and the existing cost structure remains the same.

c) The companys breakeven quantity if the variable production cost per unit increases by R8

d) The companys revenue if the variable production cost per unit decreases by R7 and the company would like to deliver a net profit before tax of R200 000.

e) The companys profit if the variable selling cost per unit increases by R5, the selling price per unit drops to R75 / unit and the company sells 40 000 units.

Budgeted income statement of ABC (Pty) Ltd for the year ended 30 June 2020