QUESTION ONE [20] Deshi Industries plans to manufacture gas stoves and the following information is applicable: Estimated sales for the year 3 000 units at R 450 each Estimated costs for the year: Variable costs R320 per unit Factory overheads (all fixed) R80 000 Administrative expenses (all fixed) R30 000

1.1 Calculate the: 1.1.1 Total operating profit for the estimated figures. (4) 1.1.2 Break-even quantity (3) 1.1.3 Break-even value (3) 1.1.4 Margin of safety in units. (3) 1.1.5 Target sales volume to achieve a profit of R50 000. (3) 1.2 The sales manager is of the opinion that a greater profit will be made if the selling price is decreased by 10% as sales volume will then increase by 10%. Calculate the total operating profit at the new selling price and advice management whether to implement this suggestion