Exxarro Llimited is considering pricing and costing for the year ahead. The following data based on expected production and sales of 15 000 units are provided for analysis: Variable manufacturing cost R1 185 000 Fixed manufacturing cost R510 000 Sales commission R5 per unit sold Fixed administration cost R130 000 Sales R210 per unit Study the information provided above and answer the following questions independently: 4.1 Calculate the break-even sales value. 4.2 Calculate the sales volume required to achieve a profit of R 800 000. 4.3 Suppose Exxaro Limited is considering a decrease of 10% per unit in the selling price of the product with the expectation that it would increase sales volume by 10%. Is this a good idea? Motivate your answer with relevant calculations.
Exxarro Llimited is considering pricing and costing for the year ahead. The following data based on expected production and sales of 15 000 units are provided for analysis: Variable manufacturing cost R1 185 000 Fixed manufacturing cost R510 000 Sales commission R5 per unit sold Fixed administration cost R130 000 Sales R210 per unit Study the information provided above and answer the following questions independently: 4.1 Calculate the break-even sales value. 4.2 Calculate the sales volume required to achieve a profit of R 800 000. 4.3 Suppose Exxaro Limited is considering a decrease of 10% per unit in the selling price of the product with the expectation that it would increase sales volume by 10%. Is this a good idea? Motivate your answer with relevant calculations.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2CMA
Related questions
Question
Exxarro Llimited is considering pricing and costing for the year ahead. The following data based on expected production and sales of 15 000 units are provided for analysis:
Variable
R1 185 000
Fixed manufacturing cost
R510 000
Sales commission
R5 per unit sold
Fixed administration cost
R130 000
Sales
R210 per unit
Study the information provided above and answer the following questions independently:
4.1 Calculate the break-even sales value.
4.2 Calculate the sales volume required to achieve a profit of R 800 000.
4.3 Suppose Exxaro Limited is considering a decrease of 10% per unit in the selling price of the product with the expectation that it would increase sales volume by 10%. Is this a good idea? Motivate your answer with relevant calculations.
Transcribed Image Text:Exxarro Llimited is considering pricing and costing for the year ahead. The following data based on expected production
and sales of 15 000 units are provided for analysis:
Variable manufacturing cost
Fixed manufacturing cost
R1 185 000
R510 000
Sales commission
R5 per unit sold
Fixed administration cost
R130 000
Sales
R210 per unit
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