2.2 Study the information provided below and calculate the following: 2.2.1 Break-even quantity before and after modemisation. 2.2.2 The number of units that must be sold to achieve a profit of R1 500 000 after modernisation. INFORMATION One of the projects of Koolaid Limited involves the manufacture of motors for air conditioners. The following information relates to the period ended 31 May 2020, when the company produced and sold 6 000 motors. R Sales 21 000 000 Variable costs 15 000 000 Fixed manufacturing costs 3 000 000 Fixed marketing and administration costs 2 000 000 Management is considering the modernisation of its manufacturing facilities in order to keep up with the changes in technology. New variable costs are expected to average R2 000 per motor, and the new total fixed costs are anticipated to be 20% more than prior to the modernisation. Selling price per unit will drop by R300 per unit and sales volume is expected to increase to 6 500 units.

2.2 Study the information provided below and calculate the following: 2.2.1 Break-even quantity before and after modemisation. 2.2.2 The number of units that must be sold to achieve a profit of R1 500 000 after modernisation. INFORMATION One of the projects of Koolaid Limited involves the manufacture of motors for air conditioners. The following information relates to the period ended 31 May 2020, when the company produced and sold 6 000 motors. R Sales 21 000 000 Variable costs 15 000 000 Fixed manufacturing costs 3 000 000 Fixed marketing and administration costs 2 000 000 Management is considering the modernisation of its manufacturing facilities in order to keep up with the changes in technology. New variable costs are expected to average R2 000 per motor, and the new total fixed costs are anticipated to be 20% more than prior to the modernisation. Selling price per unit will drop by R300 per unit and sales volume is expected to increase to 6 500 units.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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