All manufacturing cost increases with 10%. The marketing director estimates that sales volume will increase with 5% if an advertising campaign of R10 000 is undertaken. What is the operating income for Jabu?
- Jabu manufactures and sells Product X. During the most recent financial period, he sold 500 units at R750 each. There were no units of Product X in opening or closing inventory. Sales people are paid a commission of 5% on sales. The following additional information is available for this sales level:
Fixed administrative cost per unit R90.00
Total fixed manufacturing overhead R120 000
Total fixed marketing cost R50 000
Direct material usage per product 2 kg
Direct material price per kilogram R14.50
Total direct labour cost R47 500
Required:
All
(a) Calculate total sales
(b) Calculate total variable cost
(c) Calculate total fixed cost
(d) Calculate net profit
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