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5.1
REQUIRED
Study the information provided below and answer the following questions:
5.1.1 Calculate the net profit/loss that Sinclair Limited would make without the
special order. Use the format of the marginal
costing statement to present
your
answer.
5.1.2
5.1.3
Does Sinclair Limited have sufficient capacity to accept the special order?
Motivate your answer.
Determine whether the company should accept the special order. Show all
the relevant calculations.
INFORMATION
(20 Marks)
(5 marks)
(2 marks)
(5 marks)
Sinclair Limited expects to manufacture and sell 425 000 units during 2024 using 85% of its normal
capacity. The
variable manufacturing costs amount to R24 per unit. The selling price is R60 per unit.
Variable marketing costs are
R3 per unit. The fixed manufacturing overheads are expected to amount
to R3 120 000:
Fixed marketing and administrative expenses are budgeted at R2 340 000.
A customer has offered to pay R36 per unit for an additional 70 000 units.
5.2
REQUIRED
Study the information given below and answer the following questions:
5.2.1
Should Trent Limited make or buy the component in the year 2025? Support
your answer with the relevant calculations.
(6 marks)
5.2.2 Identify TWO (2) qualitative factors that Trent Limited should consider when
deciding whether to make or buy the component.
(2 marks)
INFORMATION
Trent Limited manufactures a component for one of its products. The company has sufficient capacity
to manufacture 20 000 units of the component in the year 2025. The cost per unit for the component
is expected to be R105 for materials and R75 for direct labour. The manufacturing overheads are
expected to be R150 per unit, 20% of which is variable. An analysis revealed that the component can
be purchased from an outside supplier at a cost of R270 per unit.
END OF BADER