MAC3701 Assignment 2 2026 | Due 14 September 2026 - Distinction Guaranteed

MAC3701 ASSIGNMENT 2 2026

DUE 14 SEPTEMBER 2026




PART A As part of the budgeting process for the year ending 31 December 2027,
EVD’s management is assessing the impact of increased competition from international
electric vehicle manufacturers.


A-a) Budgeted Margin of Safety per Vehicle

Step 1: Variable costs per vehicle
Battery cost per kWh: R30 000 per pack ÷ (4 cells × 5 kWh) = R1 500/kWh

Cost Item Urban (R) Explorer (R) Workings



Vehicle body 125 000 187 500 500kg × R250; 750kg × R250

Battery 90 000 135 000 60kWh × R1 500; 90kWh × R1 500

Electronic controls 40 000 50 000 Given

Other materials 20 000 30 000 1×R20 000; 1,5×R20 000

Direct labour 12 000 18 000 2 400/60 × R300; 3 600/60 × R300

Variable MOH 20 000 20 000 Given

Variable S&D 18 000 28 000 4% × selling price

Total Variable Cost 325 000 468 500

Selling Price 450 000 700 000 Given

Contribution 125 000 231 500


Weighted average contribution (WACM)
Sales mix = 300:200 = 3:2

, WACM = (125 000 × 3/5) + (231 500 × 2/5) = 75 000 + 92 600 = R167 600



(Drury, 2020, Ch 8; Study Unit 14 – multi-product CVP)




Fixed costs

Fixed MOH = (300 + 200) × R125 000 = R62 500 000

Total S&D = R28 110 000

Variable S&D = 4% × [(300×450 000) + (200×700 000)] = 4% × R275 000 000 =
R11 000 000

Fixed S&D = R28 110 000 – R11 000 000 = R17 110 000

Total Fixed Costs = R79 610 000

Break-even & Margin of Safety
B/E units = R79 610 000 ÷ R167 600 = 475 units
Budgeted sales = 500 units

MOS (units) = 500 – 475 = 25 units
MOS (%) = 25/500 = 5%
(Drury, 2020, Ch 8; Study Unit 4 – margin of safety)




MOS per vehicle:

Urban: 25 × 3/5 = 15 units

Explorer: 25 × 2/5 = 10 units