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Transcription of this question: 2.Niekerk ManufacturingNiekerk Manufacturing, a private limited company located on the outskirts Of Montevideo,Uruguay, manufactures small aluminium pipes for companies in a range Of industries. The pipesare designed following customers’ specifications. The good reputation Of Niekerk Manufacturinghas led to increased sales in the last several years and the firm is now operating at 100% capacity.Jan Niekerk, the owner Of the company, even has to decline orders when too many come in at once.He fears that this is giving his competitors opportunities to increase their sales and is consideringexpanding his factory.In 2005, the sales revenue was $4 500000.Fixed cost per yearVariable cost per piSales •ceCurrent factory (S)3500005Expanded factory (S)5700004.255TO fund the proposed expansion and increase economies Of scale, Niekerk Manufacturing will needto raise a significant amount Of finance. The capacity Of the expanded factory with any additionalequipment will be 1 600 000 pipes per year Jan Niekerk does not anticipate operating at full capacityin the expanded facility for some time, but he believes it is better to expand now rather than build asmall second factory then a third in a few years.(a)(b)(c)(d)Define the following terms:(i) private limited company(ii) economies of scale.Construct a fully labelled break-even chart for Niekerk Manufacturing at thecurrent capacity prior to the expansion.Assuming Niekerk Manufacturing sells 1200000 pipes in the first year in theexpanded factory, calculate:(i) the net profit(ii) the margin Of safety.Analyse two appropriate sources Of finance to fund the expansion Of the factoryand any additional equipment.[2 marks/[2 marks/[6 marks][2 marks/[2 marks/[6 marks]

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