Calculate breakeven in sales units and in sales value:
Tycoon makes and sells 600 toy cars per month. Each toy car is sold for RM40 each. Tycoon is currently producing at 50% of its full capacity. At this level of output, the total costs are RM22,000 of which RM10,000 are fixed.
Required:
(a) Calculate the followings:
- contribution margin per unit and ratio
- breakeven in sales units and in sales value
- Sales value in RM required to achieve $10,000 profit.
(b) In achieving the $10000 profit, what is the margin of safety in RM value and ratio.
(c) If Tycoon were to operate at full capacity, calculate the followings:
(i) number of units produced that will be sold.
(ii) total profit to be earned
(d) Prepare profit statement using marginal costing based on the current level of production and based on maximum capacity.
Question 2
The following trial balance has been extracted from the accounting records of Timmer Furniture for the year ended 31 October 2010:
|
|
RM
|
|
RM
|
|
Capital as at 1 November 2009
|
|
|
89,840
|
|
Motor vehicle - at cost
|
45,600
|
|
|
|
Office equipment - at cost
|
60,000
|
|
|
|
Provision for depreciation - motor vehicle
|
|
|
19,000
|
|
- office equipment
|
|
|
15,750
|
|
Purchases and Sales
|
295,320
|
|
479,740
|
|
Accounts receivable and payable
|
57,540
|
|
43,650
|
|
Discount allowed
|
14,590
|
|
|
|
Return outwards
|
|
|
12,480
|
|
Carriage outwards
|
24,540
|
|
|
|
Carriage inwards
|
3,510
|
|
|
|
Return inwards
|
14,650
|
|
|
|
Discount received
|
|
|
1,420
|
|
Rent and rate
|
23,750
|
|
|
|
Salaries
|
55,600
|
|
|
|
Electricity
|
11,830
|
|
|
|
Insurances
|
3,570
|
|
|
|
Sundry expenses
|
7,690
|
|
|
|
Bad debt expenses
|
7,650
|
|
|
|
Inventory at 1 November 2009
|
35,780
|
|
|
|
Bank overdraft
|
|
|
9,540
|
|
Provision for doubtful debts
|
|
|
2,320
|
|
Drawings
|
12,120
|
|
|
|
TOTAL
|
673,740
|
|
673740
|
The following information needs to be taken into account.
(i) Inventory at 31 October 2010 was RM45,760.
(ii) An insurance premium of RM2,400 covering the year to 31 December 2010 was paid on 2 January 2010.
(iii) Salaries to be accrued amounted to RM2,500.
(iv) Depreciate motor vehicle at 10% per annum using the straight-line method and office equipment at 20% using reducing balance method.
(v) Debts of RM1,110 are deemed to be uncollectible.
(vi) Provision for doubtful debts is to be adjusted to 5% of accounts receivable balance.
(vii) During the year, Timmer took inventory worth RM1,150 from the business for his own private usage.