One year later (in 2023), there was a small improvement in profitability and the ability to compete. The financial position also strengthened. From the start of 2023 the composition of sales changed to 90% credit and 10% cash as compared to 100% credit in the past. The credit terms of 30 days remained. Hartley Limited was also able to declare and pay out dividends of R400 000 during 2023. The profitability and financial position are evident in the financial statements below: HARTLEY LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 Sales Cost of sales Opening inventory Purchases Closing inventory R 22 000 000 (18 000 000) 3 500 000 19 000 000 (4 500 000) Gross profit Operating expenses Operating profit Interest expense Profit before tax Company tax Profit after tax 4 000 000 (2 500 000) 1 500 000 (200 000) 1 300 000 (351 000) 949 000 HARTLEY LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 ASSETS Non-current assets Property, plant and equipment Current assets Inventory Accounts receivable Cash R office costs of R2 100 000. iLembe Enterprises expect to manufacture and sell 45 000 bar stools at R250 each. 2 200 000 2 200 000 7 000 000 4 500 000 2 200 000 300 000 9 200 000 Hartley Limited intends expanding its product range during 2025. The management is thus considering the purchase of new machinery. The machinery will cost R2 200 000 excluding installation costs of R200 000 and is expected to have a useful life of six years. The machinery is likely to generate revenues of R800 000 per year but will require the employment of two new machine operators at R100 000 per year for each operator, and it will require maintenance and repairs averaging R50 000 per year. No scrap value is expected. Depreciation is estimated to be R400 000 per year. The company desires a minimum rate of return of 12%. EQUITY AND LIABILITIES Equity 4 200 000 Ordinary share capital (100 000 shares) 2 800 000 Retained earnings 1 400 000 Non-current liabilities Loan Current liabilities Accounts payable Short-term loan 2 000 000 2 000 000 3 000 000 2 500 000 500 000 9 200 000 To promote the company's image and to fulfil its obligations in respect of corporate social responsibility the company embarked on several initiatives during 2024 that included aiding newly established businesses owned by persons from previously disadvantaged communities. One such business. iLembe Enterprises, requested expert financial management advice on matters related to cost-volume- profit analysis. iLembe Enterprises makes hand crafted bar stools which they supply to various stores. They supplied the following estimates for analysis for the forthcoming year. The fixed manufacturing costs are expected to be R480 000 whilst the variable manufacturing costs amount to R85 per unit. The marketing costs include salaries of R600 000, advertising of R300 000 and a commission of 6% of sales. Administration costs include salaries of R864 000 and other fixed