Coffeecup (Pty) Ltd operates a chain of coffee shops, with each shop making their own breads. The management accountant of Coffeecup (Pty) Ltd is reviewing a proposal to open a new shop. The following estimates for the new shop are available: 1. Standard price and variable costs: R per bread Sales price 20.00 Ingredients (7.00) Electricity (1.00) Contribution 12.00 2. Fixed cost per annum: R Bread labour 10 000 Shop labour 10 000 Rent of bakery and shop 30 000 Total fixed costs per annum 50 000 3. Budgeted sales per annum are 5 000 breads. Sales occurs evenly throughout the year. Assume 365 days in a year. Required: Calculate the following figures for the proposed new shop. (Round all answers to the nearest constant, i.e. no decimals): Q.1.3 The break‐even point in breads sold per annum. Q.1.4 The margin of safety in breads per annum. Q.1.5 Coffeecup (Pty) Ltd wants to run a promotion during August. During this month breads will be sold at R18 each. This will lead to a monthly sales increase of 20%. Total fixed costs for August is expected to be R4 500 which will include additional advertising costs. Calculate the total expected profit for August.
Coffeecup (Pty) Ltd operates a chain of coffee shops, with each shop making their own breads. The
The following estimates for the new shop are available:
1. Standard price and variable costs:
R per bread
Sales price 20.00
Ingredients (7.00)
Electricity (1.00)
Contribution 12.00
2. Fixed cost per annum:
R
Bread labour 10 000
Shop labour 10 000
Rent of bakery and shop 30 000
Total fixed costs per annum 50 000
3. Budgeted sales per annum are 5 000 breads. Sales occurs evenly throughout the year.
Assume 365 days in a year.
Required:
Calculate the following figures for the proposed new shop. (Round all answers to the nearest
constant, i.e. no decimals):
Q.1.3 The break‐even point in breads sold per annum.
Q.1.4 The margin of safety in breads per annum.
Q.1.5 Coffeecup (Pty) Ltd wants to run a promotion during August. During this month
breads will be sold at R18 each. This will lead to a monthly sales increase of 20%.
Total fixed costs for August is expected to be R4 500 which will include additional
advertising costs. Calculate the total expected profit for August.
Step by step
Solved in 3 steps