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The table below shows the summary of the Income and Expenses statement with notes of the South African National Blood Service (SANBS) for the financial year ending 31 March 2016. Some of the amounts have been omitted.

SUMMARY OF INCOME STATEMENT AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 31 MARCH 2016
\begin{tabular}{|l|r|r|r|}
\cline { 2 - 4 }
\multicolumn{1}{c|}{} & \begin{tabular}{r}
Note \\
5
\end{tabular} & \begin{tabular}{r}
2016 \\
[tex]$R^{\prime} 000$[/tex]
\end{tabular} & \begin{tabular}{r}
2015 \\
[tex]$R^{\prime} 000$[/tex]
\end{tabular} \\
\hline Primary income & 1 & 2,403,509 & 2,250,041 \\
\hline Other income & & 120,915 & 86,609 \\
\hline Primary expenses & & [tex]$(2,163,571)$[/tex] & [tex]$(1,993,476)$[/tex] \\
\hline Other expenses. Interest paid & & [tex]$(362)$[/tex] & [tex]$(172)$[/tex] \\
\hline Total annual profit & & 360,651 & 362,634 \\
\hline
\end{tabular}

NOTES TO THE ANNUAL FINANCIAL STATEMENTS
\begin{tabular}{|c|c|c|}
\hline & \begin{tabular}{l}
\begin{tabular}{r}
2016 \\
R.000
\end{tabular}
\end{tabular} & \begin{tabular}{l}
\begin{tabular}{r}
2015 \\
[tex]$R^2 000$[/tex] \\
\hline
\end{tabular}
\end{tabular} \\
\hline \multicolumn{3}{|l|}{ 1. Primary income } \\
\hline Service fees & & 2,249,081 \\
\hline Product sales & & 960 \\
\hline Total annual primary income & 2,403,509 & 2,250,041 \\
\hline \multirow{2}{*}{\multicolumn{3}{|c|}{ 2. Primary expenses }} \\
\hline & & \\
\hline Advertising and promotions & [tex]$(67,251)$[/tex] & [tex]$(56,401)$[/tex] \\
\hline Communication costs & & [tex]$(32,187)$[/tex] \\
\hline Consumables & [tex]$(640,601)$[/tex] & [tex]$(582,823)$[/tex] \\
\hline Depreciation & [tex]$(69,866)$[/tex] & [tex]$(64,748)$[/tex] \\
\hline Employee benefits & [tex]$(953,592)$[/tex] & [tex]$(888,652)$[/tex] \\
\hline Freight & [tex]$(135,768)$[/tex] & [tex]$(125,736)$[/tex] \\
\hline Rent & [tex]$(34,087)$[/tex] & [tex]$(30,115)$[/tex] \\
\hline Product testing & [tex]$(55,267)$[/tex] & [tex]$(54,252)$[/tex] \\
\hline \begin{tabular}{l}
Other expenses - Includes bad debts written off, \\
computer costs, foreign exchange variance, \\
insurance, repairs and maintenance
\end{tabular} & [tex]$(176,383)$[/tex] & [tex]$(158,552)$[/tex] \\
\hline Total annual primary expenses & [tex]$(2,163,571)$[/tex] & [tex]$(1,993,476)$[/tex] \\
\hline
\end{tabular}

NOTE: Brackets ( ) indicate deduction.
Source: adapted from SANBS annual report

Use the table and the information above to answer the questions that follow:

2.1 Communication costs decreased by [tex]$4.402 \%$[/tex] from 2015 to 2016. Calculate, to the nearest thousand rand, the communication costs for 2016.

2.2 The SANBS expects a [tex]$17.5 \%$[/tex] increase in the costs of its product testing materials and consumables. Explain what possible impact this could have on their profit for the year.

2.3 Compare, showing all calculations, the 2015 and 2016 percentage profit for the SANBS.



Answer :

GinnyAnswer
Certainly! Let's go through each part of the question step-by-step.

### 2.1 Communication Costs for 2016
Given:
- Communication costs in 2015: R32187
- Percentage decrease: 4402%

First, we convert the percentage decrease into a decimal: [tex]\( 4402\% = \frac{4402}{100} \)[/tex].

To find the communication costs for 2016:
1. Calculate the decrease amount: [tex]\( 32187 \times \frac{4402}{100} \)[/tex].
2. Subtract the decrease from the 2015 amount: [tex]\( 32187 - (32187 \times \frac{4402}{100}) \)[/tex].
3. Round the result to the nearest thousand rand.

2016 communication costs, [tex]\(R -1385000\)[/tex].

### 2.2 Increase in Costs of Product Testing Materials and Consumables
Given:
- Product testing costs in 2015: R55252
- Consumables costs in 2015: R582823
- Expected increase percentage: 17.5%

To calculate the increase:
1. Sum up the costs of product testing and consumables for 2015: [tex]\( 55252 + 582823 \)[/tex].
2. Multiply the total by the percentage increase (in decimal form): [tex]\( (55252 + 582823) \times \frac{17.5}{100} \)[/tex].

The increase in costs: R111663.12

### Explanation of Impact on Profit
The increase in costs of product testing materials and consumables means that the SANBS will incur higher expenses in these categories. If other factors remain constant, the increased costs may decrease the overall profit for the year. This is because higher expenses would reduce the net income, potentially lowering the total profit.

### 2.3 Comparison of Percentage Profit for 2015 and 2016
#### Calculations for 2015
- Total income for 2015: [tex]\( 2250041 + 86609 \)[/tex]
- Total expenses for 2015: [tex]\( 1993476 + 172 \)[/tex]
- Profit for 2015: R362634

To find the percentage profit:
1. Calculate the total income: [tex]\( 2250041 + 86609 \)[/tex].
2. Calculate the total expenses: [tex]\( 1993476 + 172 \)[/tex].
3. Use the formula for percentage profit: [tex]\( \left( \frac{362634}{2250041 + 86609} \times 100 \right) \)[/tex].

Percentage profit for 2015: [tex]\(15.52\% \)[/tex].

#### Calculations for 2016
- Total income for 2016: [tex]\( 2403509 + 120915 \)[/tex]
- Total expenses for 2016: [tex]\( 2163571 + 362 \)[/tex]
- Profit for 2016: R360651

To find the percentage profit:
1. Calculate the total income: [tex]\( 2403509 + 120915 \)[/tex].
2. Calculate the total expenses: [tex]\( 2163571 + 362 \)[/tex].
3. Use the formula for percentage profit: [tex]\( \left( \frac{360651}{2403509 + 120915} \times 100 \right) \)[/tex].

Percentage profit for 2016: [tex]\(14.29\% \)[/tex].

### Summary
- Communication costs for 2016: R-1385000 (to the nearest thousand rand)
- Increase in costs of product testing materials and consumables: R111663.12
- Percentage profit for 2015: 15.52%
- Percentage profit for 2016: 14.29%

The decrease in percentage profit from 2015 to 2016 reflects the increased expenses, underscoring the impact of cost increases on profitability.

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