MAC3701 Assignment 2 Semester 2 MEMO | Due 14 September 2026

, Part A (a): Budgeted Margin of Safety Calculations

1. Variable Cost and Contribution Margin per Unit
Cost Component Urban (R) Explorer Calculation / Notes
(R)
Selling Price 450 700 Note 1.2
000.00 000.00
Less: Variable Costs
Vehicle Body (125 (187 Note 1.3 (0.5 t×R250 000; 0.75 t×R250 000)
000.00) 500.00)
Lithium-ion Battery (90 (135 Note 1.4 (1 pack=20 kWh=R30 000; Urban:
Pack 000.00) 000.00) 60 kWh=3 packs; Explorer: 90 kWh=4.5 packs)
Electronic Control (40 (50 Given in table
Systems 000.00) 000.00)
Other Direct Materials (20 (30 Note 1.5 (1 set=R20 000; 1.5 sets=R30 000)
000.00) 000.00)
Direct Labour (12 (18 Note 1.6 (2 400 min/60 = 40 hrs×R300;
000.00) 000.00) 3 600 min/60 = 60 hrs×R300)
Variable (20 (20 Note 1.7
Manufacturing 000.00) 000.00)
Overheads
Variable Selling & (18 (28 Note 1.8 (4)
Distribution Costs 000.00) 000.00)
Total Variable Cost (325 (468
per Unit 000.00) 500.00)
Contribution Margin 125 231 Selling Price−Total Variable Cost
per Unit 000.00 500.00


2. Total Fixed Costs
• Fixed Manufacturing Overheads:
Total Units=300 (Urban)+200 (Explorer)=500 units
Fixed MOH=500 units×R125 000 = R62 500 000.00
• Fixed Selling & Distribution (S&D) Costs:
Total Sales Revenue= 300 × R450 000 + 200 × R700 000 = R135 000 000 + R140 000 000
= R275 000 000
Total Variable S&D=4
Fixed S&D=Total S&D (Note 1.8)−Variable S&D=R28 110 000 − R11 000 000 = R17 110 000.00
• Total Fixed Costs:
Total Fixed Costs=R62 500 000 + R17 110 000 = R79 610 000.00