Mr Gomba markets two models of cellular phones, the Master X and Master Z. The cost prices of the MasterX and MasterZ are R2 080 and R3 550 respectively. He sells the MasterX for R3 400 and MasterZ for R4 400. The MasterX and MasterZ amount to 75% and 25% of the total sales respectively. The operating expenses of Mr Gomba amount to R8 840 per month. Calculate to within 2 decimal places.

Question

3.1.1 Gross profit
3.1.2 Gross profit percentage
3.1.3 Weighted average gross profit percentage
3.1.4 Break-even turnover in Rands per month
3.1.5 Turnover in Rands for a certain profit
3.1.6 Whether the business is making a profit or loss

Answer 1

3.1.1 Gross profit:
Total sales revenue = (0.75 * R3400) + (0.25 * R4400) = R2550 + R1100 = R3650
Total cost = (0.75 * R2080) + (0.25 * R3550) = R1560 + R887.50 = R2447.50
Gross profit = Total sales revenue - Total cost = R3650 - R2447.50 = R1202.50

3.1.2 Gross profit percentage:
Gross profit percentage = (Gross profit / Total sales revenue) * 100 = (R1202.50 / R3650) * 100 ≈ 32.95%

3.1.3 Weighted average gross profit percentage:
Weighted average gross profit percentage = (0.75 * 32.95%) + (0.25 * 32.95%) = 24.71% + 8.24% ≈ 32.95%

3.1.4 Break-even turnover in Rands per month:
Break-even turnover = Operating expenses / Weighted average gross profit percentage = R8840 / 0.3295 ≈ R26,824.55

3.1.5 Turnover in Rands for a certain profit:
Let's say Mr Gomba wants to make a profit of R2000.
Total cost = R2447.50
Desired profit = R2000
Sales revenue required = Total cost + Desired profit = R2447.50 + R2000 = R4447.50

Turnover for a profit of R2000 = ((0.75 * R3400) + (0.25 * R4400)) + R2000 = R3650 + R1100 + R2000 = R6750

3.1.6 Whether the business is making a profit or loss:
Since the gross profit is positive, the business is making a profit.