UNIVERSITY OF SOUTH AFRICA (UNISA)
College of Economic and Management Sciences
⋄
ASSIGNMENT 2
Semester 1 – 2026
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Module Code: MAC3702
Assignment No.: Assignment 2
Due Date: 22 April 2026
Semester: Semester 1, 2026
Submitted in partial fulfilment of the requirements for MAC3702
at the University of South Africa.
,UNISA | MAC3702 Assignment 2 – Semester 1 2026
Question 1: UrbanKick Sports Limited – Financial Management Analysis
1(a) Expected Operating Profit for the Year Ending 31 December 2025
Step 1: Expected operating profit (existing operations)
The expected operating profit (EOP) for existing operations is calculated as the weighted
average of the probability-weighted outcomes.
Table 1: Expected Operating Profit – Existing Operations
Profit (R) Probability Weighted Amount (R)
1 600 000 20% 320 000
1 700 000 30% 510 000
1 800 000 40% 720 000
2 000 000 10% 200 000
Total 100% 1 750 000
Expected Operating Profit (existing) = R1 750 000
Step 2: Expected operating profit – Nova X9
The expected annual production quantity is:
Table 2: Expected Production Quantity – Nova X9
Quantity (pairs) Probability Weighted Quantity
9 000 30% 2 700
12 500 40% 5 000
15 000 20% 3 000
18 500 10% 1 850
Total 100% 12 550
Expected quantity = 12 550 pairs
Step 3: Expected operating profit for Nova X9
Page 1 of 21
, UNISA | MAC3702 Assignment 2 – Semester 1 2026
Selling price per pair = R880
Variable cost per pair = 480 + 220 + 55 = R755
Contribution per pair = 880 − 755 = R125
Total contribution = 12 550 × 125 = R1 568 750
Fixed costs = R450 000
Operating profit – Nova X9 = 1 568 750 − 450 000 = R1 118 750
Step 4: Total expected operating profit
Total Expected Operating Profit = 1 750 000 + 1 118 750
= R2 868 750
Implementation Insight
The total expected operating profit of R2 868 750 represents a meaningful improve-
ment over the existing business alone. Nova X9 contributes R1 118 750, which is
approximately 39% of the combined profit, confirming that the new product line is a
financially material addition to UKS’s operations.
Page 2 of 21
College of Economic and Management Sciences
⋄
ASSIGNMENT 2
Semester 1 – 2026
⋄
Module Code: MAC3702
Assignment No.: Assignment 2
Due Date: 22 April 2026
Semester: Semester 1, 2026
Submitted in partial fulfilment of the requirements for MAC3702
at the University of South Africa.
,UNISA | MAC3702 Assignment 2 – Semester 1 2026
Question 1: UrbanKick Sports Limited – Financial Management Analysis
1(a) Expected Operating Profit for the Year Ending 31 December 2025
Step 1: Expected operating profit (existing operations)
The expected operating profit (EOP) for existing operations is calculated as the weighted
average of the probability-weighted outcomes.
Table 1: Expected Operating Profit – Existing Operations
Profit (R) Probability Weighted Amount (R)
1 600 000 20% 320 000
1 700 000 30% 510 000
1 800 000 40% 720 000
2 000 000 10% 200 000
Total 100% 1 750 000
Expected Operating Profit (existing) = R1 750 000
Step 2: Expected operating profit – Nova X9
The expected annual production quantity is:
Table 2: Expected Production Quantity – Nova X9
Quantity (pairs) Probability Weighted Quantity
9 000 30% 2 700
12 500 40% 5 000
15 000 20% 3 000
18 500 10% 1 850
Total 100% 12 550
Expected quantity = 12 550 pairs
Step 3: Expected operating profit for Nova X9
Page 1 of 21
, UNISA | MAC3702 Assignment 2 – Semester 1 2026
Selling price per pair = R880
Variable cost per pair = 480 + 220 + 55 = R755
Contribution per pair = 880 − 755 = R125
Total contribution = 12 550 × 125 = R1 568 750
Fixed costs = R450 000
Operating profit – Nova X9 = 1 568 750 − 450 000 = R1 118 750
Step 4: Total expected operating profit
Total Expected Operating Profit = 1 750 000 + 1 118 750
= R2 868 750
Implementation Insight
The total expected operating profit of R2 868 750 represents a meaningful improve-
ment over the existing business alone. Nova X9 contributes R1 118 750, which is
approximately 39% of the combined profit, confirming that the new product line is a
financially material addition to UKS’s operations.
Page 2 of 21
