Calculate the total Operating profit/loss per month, if Proposal 1 is implemented. INFORMATIONAn entrepreneur recently opened a filling station. Diesel is sold at R15 per liter and the variable costs totalR12 per liter. The fixed costs per month are R270 000. After six months of trading, the sales achievedwere 1080 000 liters and the sales volume has remained at the same level each month. In an attempt toimprove performance, the entrepreneur is considering the following proposals:Proposal 1Customers will be allowed to purchase diesel on credit. It is estimated that 50% of the averagemonthly sales (in litres) will be to customers who would take advantage of this opportunity. Sales tothese customers should increase by 20%, as they are expected to buy exclusively from this fillingstation. Sales volumes to customers who do not take advantage of the credit policy are expected toremain 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.REQUIREDStudy 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.

Concept. Operating profit / loss. When cost of goods sold and other operating expenses of the…

Answered: INFORMATION An entrepreneur recently…

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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