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Question 2 (30 marks) Amira, the owner of a music equipment shop wanted to have a sales budget for the next three months. She asked her assistant Dina to do the job. After consulting with friends in the same business, Dina estimated February revenues to be $30,000. She expects revenues to increase by $3,000 per month in March and April. Dina also expects that 60% of sales to be cash and 40% of sales to be on credit. Sales on credit are expected to be collected as follows: 30% in the month of sale and 70% in the month following the sales. Required: Based on the above information, calculate the expected cash collection for the month of April Question 3 ( 40 marks) Newtel Inc. manufactures Cell phones. Last year Newtel sold 30,000 phones at $80 each. Total costs amounted to $1,800,000 of which S600,000 were considered fixed. In an attempt to improve its product, the company is considering replacing a component part that has a cost of $16 with a new and better part costing S26 per unit in the coming year. A new machine would also be needed to increase plant capacity. The machine would cost $100,000 with a useful life of five years and a $20,000 salvage value. The company uses straight-line depreciation on all plant assets. (Ignore company tax.) Required: Calculate in units, Innovation's break-even point for last year. (10 marks) 2. Calculate the number of units that the company would have had to sell in the last year to cam $ 200,000 Prove your answer.( 10 marks) If Newtel increases the selling price by $20, and purchases the new part and the new machine, calculate the new contribution margin, the new fixed cost & the number of units that the company will have to sell to make the same net income as last year. ( 20 marks)

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