Breaking Down Soprano Devices' Financial Situation

Sure, let's break it down step-by-step. ### Given Data: - Rent: R40,000 (fixed cost) - Labour: R600 per TV (variable cost) - Depreciation on equipment: R1,000 (fixed cost) - Raw materials: R350 per TV (variable cost) - TVs Sold: 200 ### Calculations: 1. **Total Fixed Costs (TFC):** Fixed costs are costs that do not vary with the level of output. ``` TFC = Rent + Depreciation on equipment TFC = R40,000 + R1,000 = R41,000 ``` 2. **Average Fixed Costs (AFC):** Average fixed costs are the total fixed costs divided by the number of units sold. ``` AFC = TFC / TVs Sold AFC = R41,000 / 200 = R205 ``` 3. **Total Variable Costs (TVC):** Variable costs are costs that vary directly with the level of output. ``` TVC = (Labour per TV + Raw materials per TV) × TVs Sold TVC = (R600 + R350) × 200 TVC = R950 × 200 = R190,000 ``` 4. **Average Variable Costs (AVC):** Average variable costs are the total variable costs divided by the number of units sold. ``` AVC = TVC / TVs Sold AVC = R190,000 / 200 = R950 ``` 5. **Total Costs (TC):** Total costs are the sum of total fixed costs and total variable costs. ``` TC = TFC + TVC TC = R41,000 + R190,000 = R231,000 ``` 6. **Average Total Costs (ATC):** Average total costs are the total costs divided by the number of units sold. ``` ATC = TC / TVs Sold ATC = R231,000 / 200 = R1,155 ``` ### Summary of Calculations: i) **Total Fixed Costs (TFC):** R41,000 ii) **Average Fixed Costs (AFC):** R205 iii) **Total Variable Costs (TVC):** R190,000 iv) **Average Variable Costs (AVC):** R950 v) **Total Costs (TC):** R231,000 vi) **Average Total Costs (ATC):** R1,155