INFORMATION An entrepreneur recently opened a filling station. Diesel is sold at R15 per liter and the variable costs total R12 per liter. The fixed costs per month are R270 000. After six months of trading, the sales achieved were 1080 000 liters and the sales volume has remained at the same level each month. In an attempt to improve performance, the entrepreneur is considering the following proposals: Proposal 1 Customers will be allowed to purchase diesel on credit. It is estimated that 50% of the average monthly sales (in litres) will be to customers who would take advantage of this opportunity. Sales to these customers should increase by 20%, as they are expected to buy exclusively from this filling station. Sales volumes to customers who do not take advantage of the credit policy are expected to remain unchanged. Additional costs arising from this proposal are expected to be as follows: Bad debts of 1% of the sales in respect of customers who use the credit facility. Fixed administrative costs of R18 000 per month. REQUIRED Study the information provided below and answer each of the following questions independently: Calculate the total Operating profit/loss per month, if Proposal 1 is implemented.
INFORMATION An entrepreneur recently opened a filling station. Diesel is sold at R15 per liter and the variable costs total R12 per liter. The fixed costs per month are R270 000. After six months of trading, the sales achieved were 1080 000 liters and the sales volume has remained at the same level each month. In an attempt to improve performance, the entrepreneur is considering the following proposals: Proposal 1 Customers will be allowed to purchase diesel on credit. It is estimated that 50% of the average monthly sales (in litres) will be to customers who would take advantage of this opportunity. Sales to these customers should increase by 20%, as they are expected to buy exclusively from this filling station. Sales volumes to customers who do not take advantage of the credit policy are expected to remain unchanged. Additional costs arising from this proposal are expected to be as follows: Bad debts of 1% of the sales in respect of customers who use the credit facility. Fixed administrative costs of R18 000 per month. REQUIRED Study the information provided below and answer each of the following questions independently: Calculate the total Operating profit/loss per month, if Proposal 1 is implemented.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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