Two businesses, P Ltd. and Q Ltd. sell the same type of product in the same type of market. Their budgeted profit and loss accounts for the coming year are as under: P Ltd. (Rs.) Q. Ltd. (Rs.) Sales 150000 150000 Variable Cost 120000 100000 Fixed cost 15000 35000 Budgeted Net profit 15000 15000 You are required to: Calculate the break-even point for each business Calculate the sales volume at which each business will earn Rs.5,000 Profit. State which business is likely to earn greater profit in conditions of: Heavy demand for the product Low de

Two businesses, P Ltd. and Q Ltd. sell the same type of product in the same type of market. Their budgeted profit and loss accounts for the coming year are as under: P Ltd. (Rs.) Q. Ltd. (Rs.) Sales 150000 150000 Variable Cost 120000 100000 Fixed cost 15000 35000 Budgeted Net profit 15000 15000 You are required to: Calculate the break-even point for each business Calculate the sales volume at which each business will earn Rs.5,000 Profit. State which business is likely to earn greater profit in conditions of: Heavy demand for the product Low de

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 34P: Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming...

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Two businesses, P Ltd. and Q Ltd. sell the same type of product in the same type of market. Their budgeted profit and loss accounts for the coming year are as under: P Ltd. (Rs.) Q. Ltd. (Rs.) Sales 150000 150000 Variable Cost 120000 100000 Fixed cost 15000 35000 Budgeted Net profit 15000 15000 You are required to: Calculate the break-even point for each business Calculate the sales volume at which each business will earn Rs.5,000 Profit. State which business is likely to earn greater profit in conditions of: Heavy demand for the product Low demand for the product,and,briefly give your argument as well.
REQUIRED Use the information provided below to answer each of the following questions independently: 2.1 Calculate the break-even quantity. (2 Marks) 2.2 Calculate the sales value required to achieve a net profit of R150 000, using the marginal income ratio. (4 Marks) 2.3 Determine the selling price per unit if a net profit of R624 600 is desired. (4 Marks) INFORMATION The following information was extracted from the budget of Mary's Manufacturers for the period July to December 2021: 1. Total production and sales 2 300 units 2. Selling price per unit R200 3. Variable manufacturing costs per unit: Direct materials R60 Direct labour R40 Overheads R20 4. Fixed manufacturing overheads R200 000 5. Other costs: Fixed marketing and administrative costs R100 000 Sales commission 10% of sales
Sales Revenue Approach, Variable Cost Ratio, Contribution MarginRatioArberg Company’s controller prepared the following budgeted income statement for thecoming year: Required:1. What is Arberg’s variable cost ratio? What is its contribution margin ratio?2. Suppose Arberg’s actual revenues are $30,000 more than budgeted. By how much willoperating income increase? Give the answer without preparing a new income statement.3. How much sales revenue must Arberg earn to break even? Prepare a contribution marginincome statement to verify the accuracy of your answer.4. What is Arberg’s expected margin of safety?5. What is Arberg’s margin of safety if sales revenue is $380,000?
How many units will Cadre need to sell in order to realize a target profit of $300,000? Use commas as needed (i.e. 1,234). What dollar sales will Cadre need to generate in order to realize a target profit of $300,000? Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Construct a contribution margin income statement for the month of November that reflects $2,400,000 in sales revenue for Cadre, Inc. Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Cadre Inc. Contribution Margin Income Statement For the Month of November
A company is making plans for next year, using cost-volume-profit analysis as its planning tool. Next year's sales data about its product are as follows Selling price P60 Variable manufacturing costs per unit 22.50 Variable selling and administrative costs 4.5 Fixed operating costs (60% is manufacturing costs) P159,500 Income tax rate 30% How much should sales be next year if the company wants to earn profit after tax of P23,100, the same amount that it earned last year?
Use the information given below to calculate each of the following independently 3.1 Expected total Marginal Income and Net Profit/Loss Slumber Limited manufactures beds. The following information was extracted from the budget for 2024:Expected production and sales (units) 1 200Selling price per bed R6 000Direct materials cost per bed R1 700Direct labour cost per bed R860Variable manufacturing overheads cost per bed R320Fixed manufacturing overheads cost R1 084 800Sales commission (as a percentage of the selling price) 20%Fixed administrative and selling costs R720 000 PLEASE PUT THE ANSWER IN RANDS
Use the information given below to calculate each of the following independently 3.4 Break-even value using the marginal income ratio, if the company spends an additionalR435 200 on salaries INFORMATIONSlumber Limited manufactures beds. The following information was extracted from the budget for 2024:Expected production and sales (units) 1 200Selling price per bed R6 000Direct materials cost per bed R1 700Direct labour cost per bed R860Variable manufacturing overheads cost per bed R320Fixed manufacturing overheads cost R1 084 800Sales commission (as a percentage of the selling price) 20%Fixed administrative and selling costs R720 000 PLEASE PUT THE ANSWER IN RANDS
a) Compute the breakeven sales dollars of cach product assuming the same sales mix remains constant. b) Prepare an analysis showing whether Product Z should be eliminated. The amount of change to net income should be computed. c) Assume the current demand of cach product is same as the sales volume the company has for the year. Below is the machine processing time required for cach product. Product Machine processing time in hours i. How many units should the company produce for each product if there is a constraint of only 24.000 hours of machine processing time in the year. ii. Compute the highest possible net income camed by the company. 3 2 An accountant has prepared the folowing product-line income statement for the year: Product Tatal No of mts sokd 5,000 4,000 4,000 Saks Varible enpermes 200,000 S 120,000 100,000 S 60.000 40,000 S 20,000 60,000 40,000 20,000 Cotribution mangin 80,000 40,000 20,000 Fihed expenses Rert Depreciin 10,000 12,000 8,000 5.000 6,000 2,000 2,400 3,000…
Austin Co. plans to manufacture and sell electronic products. The projected data for producing its products for a typical year is as follows: Budgeted sales (in units) 1,200 Selling price per unit Variable costs per unit Total fixed costs $100 $80 $20,000 Income tax rate 20% Desired profits after tax $16,000 Required) Please answer the following questions and show all your works (formula and numbers) to get full credits. a. What are the contribution margin per unit and CM ratio? b. How many units (per year) would it have to produce in order to break even? c. To earn the desire after-tax profits, how many units (per year) would it have to sell/produce? d. Calculate the margin of safety ratio in the budgets amounts (per year) are sold. Define what is meant by the MOS. e. Calculate the degree of operating leverage if the budgets amount (per year) are sold. Define what is meant by the DOL.
Solve the following independent cases and label your supporting computations properly. A) The company's projected profit for the coming year is as follows: Total P 200,000' 120,000 80,000 64,000 16,000 Per Unit P 20 Sales Less: Variable Costs 12 P 8 Contribution Margin P Less: Fixed Costs Net Income 1. Compute the additional profit that the company would earn if sales were P25,000 more than expected. B) KTA sells a special type of health food at a price of P16 per pound. Last year, it purchases this food from its supplier at a cost of P12 per pound. The supplier informed KTA that its cost increases and that this product will now be priced at P14 a pound. Over the years, KTA established a steady market and intends to pass the cost increase along to its customers and also add a P1 per unit to the price for additional profit. Fixed cost for the year are not expected to change and will remain at P34,000. Income tax rate is 32%. The net income after tax last year was P24,000. 2. If KTA can…
The budget of a company for next period shows that it would breakeven at a sales value of GHC800000 with fixed cost of GHC320000. What sales value should the company target to derive a profit of GH¢200000 in the next period? OA. GHC1320000 O B. GHC1300000 OC. GHC1000000 OD. GHC866667
Sohar Company’s financial information is given in the table below. Year Sales (OMR) Fixed Costs Variable Costs 2019 405000 90000 225000 2020 450000 120000 240000 Calculate: P/V ratio, E.P. Sales required to earn a profit of OMR 40000. Margin of safety at a profit of OMR 50000 Profit when sales are OMR. 200000.