URGENT

1. Assuming that Mpume sells to customers in the proportion of the number of customers, how many of each category of customer must she sell to in order for Financial Wizards to break-even from her sales each month? Note: Only account for the costs incurred by Financial Wizards.
2. A key assumption for multiproduct cost-volume-profit analysis is that there is a constant sales mix. Explain why and how the break-even point changes when there is a change in the sales mix. 3. Based on the information provided by Mpume, prepare the optimal sales budget (in number of customers and Rands) to be submitted to Financial Wizards which maximises the profit she will earn.
4. Draft a memorandum to Mpume in which you thoroughly discuss any qualitative factors she may potentially wish to consider before implementing the sales budget you have prepared for her in 3 above.Presentation

Mpume Hlope is a sales representative at Financial Wizards (Pty) Ltd ("Financial Wizards), a company which sells various financial and insurance products to individuals. Financial Wizards is an authorised financial service provider. Historically, Financial Wizards has focused on providing its products to reduced income households to support financial education needs. This is because management at Financial Wizards believed that large financial service providers have unfairly taken advantage of the under-privileged communities by the sale of inferior products, due to their lack of financial education. As a result, sales representatives at Financial Wizards are specifically trained to educate these communities in financial matters as a part of the sales process. Due to this high level of care and commitment, Financial Wizards has earned a strong reputation among the deprived communities and won numerous awards for its excellent work in these communities. However, in the last year, due to the COVID-19 pandemic and the significant financial strain it has placed on the company's target market, Financial Wizards has begun focusing more on wealthy and middle-class customers to ensure it continues to remain profitable. Mpume specialises in the sale of life insurance on which she earns a commission for each sale made. In a drive to improve the performance of its sales representatives, Financial Wizards has commenced requiring its representatives to prepare sales budgets to which they will be held accountable. Mpume has approached you, her close friend, to assist with the preparation of her optimal sales budget. Financial Wizards requires each of its sales representatives to spend 172 hours per month dealing with customers. In addition, Mpume would like to spend more quality time with her family and has decided to limit her personal travel between customers to 1 000 km for the month. To assist with the preparation of her optimal sales budget, Mpume has provided you with her expected demand for life insurance products for the next month based on customer category: Wealthy customers Note 1 Number of customers 10 Average sale per customer R9 000 Commission (% of sales earned by Mpume) 10% Average time per customer 8 hours Average distance travelled per customer 50 kms Middle class Underprivileged customers customer's Note 2 Note 3 20 30 R6 000 R2 000 8% 6% 4 hours 4 hours 7 kms 3 kms Notes: 1. Wealthy customers are a new focus area of Financial Wizards. As a result, sales representatives are paid a higher rate of commission to incentivise them to bring in wealthy customers. However, most large financial service providers have already established themselves in this market and thus sales representatives need to spend significantly more time per customer to win them over. In addition, wealthy customers tend to live in more disbursed locations, requiring greater travelling time. 2. Although Financial Wizards has a small client base of middle-class customers, this is still a relatively new focus area for the company. Thus, they still need some extra time to be won over, but not as much as wealthy customers. 3. Under-privileged customers form the backbone of Financial Wizards client base. As these customers generally have less financial education, the sales representatives spend a great amount of time educating them while selling them the products. Despite the low sales revenue earned these customers are very loyal to the company and are the only category of customer who regularly recommend Financial Wizards to family and friends as well as purchasing other products from Financial Wizards. Mpume, incurs a variable cost of R5 per kilometre travelled for fuel and other vehicle maintenance. These travel costs are not reimbursed by Financial Wizards and they are paid by Mpume in her private capacity. Costs incurred by Financial Wizards Other than the commission paid to its sales representatives, Financial Wizards does not incur any variable costs in relation to the sale of life insurance. However, Financial Wizards does incur fixed costs of R49 560 per month in providing each sales representative with office space and other work-related requirements. Mpume Hlope is a sales representative at Financial Wizards (Pty) Ltd ("Financial Wizards), a company which sells various financial and insurance products to individuals. Financial Wizards is an authorised financial service provider. Historically, Financial Wizards has focused on providing its products to reduced income households to support financial education needs. This is because management at Financial Wizards believed that large financial service providers have unfairly taken advantage of the under-privileged communities by the sale of inferior products, due to their lack of financial education. As a result, sales representatives at Financial Wizards are specifically trained to educate these communities in financial matters as a part of the sales process. Due to this high level of care and commitment, Financial Wizards has earned a strong reputation among the deprived communities and won numerous awards for its excellent work in these communities. However, in the last year, due to the COVID-19 pandemic and the significant financial strain it has placed on the company's target market, Financial Wizards has begun focusing more on wealthy and middle-class customers to ensure it continues to remain profitable. Mpume specialises in the sale of life insurance on which she earns a commission for each sale made. In a drive to improve the performance of its sales representatives, Financial Wizards has commenced requiring its representatives to prepare sales budgets to which they will be held accountable. Mpume has approached you, her close friend, to assist with the preparation of her optimal sales budget. Financial Wizards requires each of its sales representatives to spend 172 hours per month dealing with customers. In addition, Mpume would like to spend more quality time with her family and has decided to limit her personal travel between customers to 1 000 km for the month. To assist with the preparation of her optimal sales budget, Mpume has provided you with her expected demand for life insurance products for the next month based on customer category: Wealthy customers Note 1 Number of customers 10 Average sale per customer R9 000 Commission (% of sales earned by Mpume) 10% Average time per customer 8 hours Average distance travelled per customer 50 kms Middle class Underprivileged customers customer's Note 2 Note 3 20 30 R6 000 R2 000 8% 6% 4 hours 4 hours 7 kms 3 kms Notes: 1. Wealthy customers are a new focus area of Financial Wizards. As a result, sales representatives are paid a higher rate of commission to incentivise them to bring in wealthy customers. However, most large financial service providers have already established themselves in this market and thus sales representatives need to spend significantly more time per customer to win them over. In addition, wealthy customers tend to live in more disbursed locations, requiring greater travelling time. 2. Although Financial Wizards has a small client base of middle-class customers, this is still a relatively new focus area for the company. Thus, they still need some extra time to be won over, but not as much as wealthy customers. 3. Under-privileged customers form the backbone of Financial Wizards client base. As these customers generally have less financial education, the sales representatives spend a great amount of time educating them while selling them the products. Despite the low sales revenue earned these customers are very loyal to the company and are the only category of customer who regularly recommend Financial Wizards to family and friends as well as purchasing other products from Financial Wizards. Mpume, incurs a variable cost of R5 per kilometre travelled for fuel and other vehicle maintenance. These travel costs are not reimbursed by Financial Wizards and they are paid by Mpume in her private capacity. Costs incurred by Financial Wizards Other than the commission paid to its sales representatives, Financial Wizards does not incur any variable costs in relation to the sale of life insurance. However, Financial Wizards does incur fixed costs of R49 560 per month in providing each sales representative with office space and other work-related requirements