user/AppData/local/temp/WPDNSE/%7B2DF5AC45-A6F9-1E45-C708-SAF703044A5F%7D/PGDPM%20-%20Project%20Financial%20Management.pdf QUESTION 4 (20 Marks) 4.1 REQUIRED Study the information given below and calculate the following, if the proposal is accepted: 4.1.1 Break-even quantity (4 marks) 4.12 The number of litres of diesel that must be sold to achieve a profit of R300 000 per month. (4 marks) INFORMATION The output of a project of GHJ Limited is diesel. The diesel is sold at R17.60 per litre and the variable costs total R14 per litre. The fixed costs per month are R272 400. After six months of commencing the project, the sales achieved was 1 075 260 litres and the sales were more or less the same volume each month. In an attempt to improve performance, the project manager is considering the following proposal: Customers (Service stations) will be allowed to purchase diesel on credit. It is estimated that 50% of the average monthly sales in litres) will be to customers who would take advantage of this opportunity. Sales to these customers should increase by 20%. Sales volumes to customers who do not take advantage of the credit policy are expected to remain unchanged. Additional costs arising from this proposal are expected to be Selling costs of R0.60 per litre. Fixed administrative costs of R15 000 per month 4.2 REQUIRED Study the information provided below and answer the following questions Sales to to customers who do not take advantage of the are expected to remain unchanged. Additional costs arising from this proposal are expected to be: Selling costs of R0.60 per litre. Fixed administrative costs of R15 000 per month. 4.2 REQUIRED Study the information provided below and answer the following questions: 4.2.1 Calculate the activity cost rates using activity-based costing (ABC). 4.2.2 Calculate the total overheads cost per product using the ABC system. (6 marks) (4 marks) INFORMATION Salsa Ltd manufactures two products, viz. Product M and Product N. The enterprise intends implementing the Activity-Based Costing (ABC) system. The budgeted information for 2021 is as follows R Total overheads: Machine set-ups 4 500 000 Design costs Other overheads 300 000 900 000 3300 000 COMPAS 7B2DF5AC45-A6F9-1E45-C70B-SAF703044A5F%7D/PGDPM%20-%20Project%20Financial%20Management.pdf Product M Total Units manufactured Product N 13 500 units 1 500 units Machine set-ups 150 set ups 150 set ups 15 000 units 300 set ups 30 000 hours Design hours Direct labour hours 6 000 hours 24 000 hours 48 000 hours 12 000 hours 60 000 hours Other overheads are allocated to individual products on the basis of direct labour hours 4.3 An order obtained was received for the supply of a product which is made at a project of VBN Limited. The material cost of making the product for the order is 20 000. Only 25% of the primary material for the product is available in stock. The material was purchased a year ago for R6 000. If the material is not used it will be scrapped at a price of R2 000 The remaining material has to be purchased at a cost of R14 000. How much is the total relevant cost of the material? (2 marks) COMPAS user/AppData/local/temp/WPDNSE/%7B2DF5AC45-A6F9-1E45-C708-SAF703044A5F%7D/PGDPM%20-%20Project%20Financial%20Management.pdf QUESTION 4 (20 Marks) 4.1 REQUIRED Study the information given below and calculate the following, if the proposal is accepted: 4.1.1 Break-even quantity (4 marks) 4.12 The number of litres of diesel that must be sold to achieve a profit of R300 000 per month. (4 marks) INFORMATION The output of a project of GHJ Limited is diesel. The diesel is sold at R17.60 per litre and the variable costs total R14 per litre. The fixed costs per month are R272 400. After six months of commencing the project, the sales achieved was 1 075 260 litres and the sales were more or less the same volume each month. In an attempt to improve performance, the project manager is considering the following proposal: Customers (Service stations) will be allowed to purchase diesel on credit. It is estimated that 50% of the average monthly sales in litres) will be to customers who would take advantage of this opportunity. Sales to these customers should increase by 20%. Sales volumes to customers who do not take advantage of the credit policy are expected to remain unchanged. Additional costs arising from this proposal are expected to be Selling costs of R0.60 per litre. Fixed administrative costs of R15 000 per month 4.2 REQUIRED Study the information provided below and answer the following questions Sales to to customers who do not take advantage of the are expected to remain unchanged. Additional costs arising from this proposal are expected to be: Selling costs of R0.60 per litre. Fixed administrative costs of R15 000 per month. 4.2 REQUIRED Study the information provided below and answer the following questions: 4.2.1 Calculate the activity cost rates using activity-based costing (ABC). 4.2.2 Calculate the total overheads cost per product using the ABC system. (6 marks) (4 marks) INFORMATION Salsa Ltd manufactures two products, viz. Product M and Product N. The enterprise intends implementing the Activity-Based Costing (ABC) system. The budgeted information for 2021 is as follows R Total overheads: Machine set-ups 4 500 000 Design costs Other overheads 300 000 900 000 3300 000 COMPAS 7B2DF5AC45-A6F9-1E45-C70B-SAF703044A5F%7D/PGDPM%20-%20Project%20Financial%20Management.pdf Product M Total Units manufactured Product N 13 500 units 1 500 units Machine set-ups 150 set ups 150 set ups 15 000 units 300 set ups 30 000 hours Design hours Direct labour hours 6 000 hours 24 000 hours 48 000 hours 12 000 hours 60 000 hours Other overheads are allocated to individual products on the basis of direct labour hours 4.3 An order obtained was received for the supply of a product which is made at a project of VBN Limited. The material cost of making the product for the order is 20 000. Only 25% of the primary material for the product is available in stock. The material was purchased a year ago for R6 000. If the material is not used it will be scrapped at a price of R2 000 The remaining material has to be purchased at a cost of R14 000. How much is the total relevant cost of the material? (2 marks) COMPAS