2.2 Merry Motors specializes in the manufacture of small capacity motors. The following information is...
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Accounting
2.2 Merry Motors specializes in the manufacture of small capacity motors. The following information is available for the forthcoming year:
| R | |
| Selling price per unit | 2 400 |
| Variable cost per unit | 1 800 |
| Total fixed costs | 48 000 |
The expected sales volume is 200 units.
Required:
2.2.1 Calculate the number of units that must be sold in order to make a profit of R50 000 (answer rounded off to the nearest whole number). (5)
2.2.2 The manager of Merry Motors wants to increase sales by 25 units with the following proposal:
Would you approve of the managers proposal? Motivate your answer by showing the effect it would have on the profit of Merry Motors. (5)
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