Question Three

Luya Limited plans to manufacture a new product and the following information is applicable:

Estimated sales for the year 2017	14 000 units at R90 each
Estimated costs for the year 2017
Direct material	R24 per unit
Direct labour	R4 per unit
Factory overheads (all fixed)	48 000 per annum
Selling expenses (variable)	R12 per unit
Administrative expenses (all fixed)	R64 000 per annum

Required:

3.1 Calculate the break-even quantity. (5)

3.2 Calculate the break-even value. (5)

3.3 Calculate the break-even value using the marginal income ratio. (5)

3.4 Calculate the selling price per unit if the profit per unit is R5. (5)

3.5 Calculate the new break-even quantity and value if selling price is increased by 10%. (5)