3.2 3.2.1 3.2.2 REQUIRED Answer the following questions from the information pro

Question

3.2 3.2.1 3.2.2 REQUIRED Answer the following questions from the information provided below: What price does Scorpio Ltd have to charge for each unit of the product to break ev if all 50 000 units produced are sold? If Scorpio Ltd decides on a selling price of R100 and has a profit objective of R200 000, what sales volume is required? en, INFORMATION Scorpio Ltd expects to incur the following costs to produce and sell 50 000 units of its product: Variable costs per unit Total fixed costs R60 R280 000 (2 QUESTION 4 REQUIRED Prepare the Cash Budget of Rey's Manufacturers for August, September and October 2018. Note: separate amount columns for each month. INFORMATION

Explanation / Answer

3.2.1. For break even total contribution required = 280,000

Contribution margin per unit = 280,000 / 50,000 = 5.6 per unit

Selling price required per unit for break even = 60 + 5.6 = 65.6 per unit.

3.2.2. Contribution margin per unit = 100 - 60 = 40 per unit

Sales volume required = (profit required + fixed cost) / contribution margin per unit = (200,000 + 280,000) / 40 = 12,000 units.

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