Maureen is currently looking into a business opportunity that will require her to manufacture branded match T-shirts for a local cricket club. Although she thinks it might be a good opportunity, she is a bit wary of accepting the contract as her free time is limited and she will only be able to produce 100 T-shirts per month. T-shirts will be sold at R200 each to club members. The costs associated with the opportunity are as follows. Description Costs Cost of material for T-shirt R40 per shirt Cost of printing R5 per shirt Labour costs R25 per shirt Variable overhead costs R10 per shirt Fixed overhead costs R15 000 per month Required: Calculate the break even point in units and advise Maureen whether she should take up the opportunity or not. Provide a reason for your answer.
Maureen is currently looking into a business opportunity that will require her to manufacture branded match T-shirts for a local cricket club. Although she thinks it might be a good opportunity, she is a bit wary of accepting the contract as her free time is limited and she will only be able to produce 100 T-shirts per month. T-shirts will be sold at R200 each to club members. The costs associated with the opportunity are as follows. Description Costs Cost of material for T-shirt R40 per shirt Cost of printing R5 per shirt Labour costs R25 per shirt Variable overhead costs R10 per shirt Fixed overhead costs R15 000 per month Required: Calculate the break even point in units and advise Maureen whether she should take up the opportunity or not. Provide a reason for your answer.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Maureen is currently looking into a business opportunity that will require her to
manufacture branded match T-shirts for a local cricket club. Although she thinks it
might be a good opportunity, she is a bit wary of accepting the contract as her free
time is limited and she will only be able to produce 100 T-shirts per month.
T-shirts will be sold at R200 each to club members.
The costs associated with the opportunity are as follows.
Description
Costs
Cost of material for T-shirt
R40 per shirt
Cost of printing
R5 per shirt
Labour costs
R25 per shirt
Variable overhead costs
R10 per shirt
Fixed overhead costs
R15 000 per month
Required:
Calculate the break even point in units and advise Maureen whether she should
take up the opportunity or not. Provide a reason for your answer.
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