FIN3701 ASSIGNMENT 2 SEMESTER 1 - 2020 DUE: 30 APRIL 2020 2 QUESTION 1 1.1 Calculate the business operating break-even point. 3 1.1 Calculate the business operating break-even point. Monthly fixed costs = R4 000 Selling price per unit = R10 000 ÷ 1 500 figurines = R6.67 Variable cost per unit = R6 Break-even point = = = 5 970 6 000 1.2 Calculate the EBIT on the departmental store order. Units sold 1 500 Price per unit [R10 000 ÷ 1 500 figurines] R6.67 Total Sales R10 000 Less: Fixed costs (R4 000) Variable cost per unit (R6) Total variable costs [R6 × 1 500 figurines] (R9 000) Total Expense (R13 000) EBIT [R10 000 – R13 000] (R3 000) 1.3 If Johan renegotiates the contract at a price of R10,00 per figurine, what will the EBIT be? Units sold 1 500 Price per unit R10 Total Sales [R10 × 1 500 figurines] R15 000 Less: Fixed costs (R4 000) Variable cost per unit (R6) Total variable costs [R6 × 1 500 figurines] (R9 000) Total Expense (R13 000) EBIT [R15 000 – R13 000] R2 000 4 1.4 If the buyer pays R8,00 per unit, but is willing to negotiate quantity, what quantity of figurines will result in an EBIT of R4 000,00?
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