Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Managerial Accounting Expert

problem1) ABSORBTION VS VARIABLE COSTING

Energize Ltd is a manufacturing company which has started producing a specialist device and has the following data for the first month of operation, January 2013:

Unit information:                                                             units
Opening inventory                                                             0
Sales                                                                              35000
Production                                                                      40000
Closing Inventory                                                             5000
Cost information:
Manufacturing costs:
                                                                                        Rands
Direct materials                                                              R 30 per unit
Direct labour                                                                  R 14 per unit
Variable manufacturing overhead expenses                     R 4 per unit
Fixed manufacturing overhead expenses                         R1280000
Selling and administrative costs:
Variable selling and administrative expenses                    R4 per unit
Fixed selling and administrative expenses                       R1120 000

Each device is sold at R120. Fixed overheads are allocated on the basis of production units.

Management is anxious to see how the new device is performing in terms of profitability.

Required:

1.1 Compute unit product cost for one device (unit) assuming the:

1.1.1 Absorption costing system is used.

1.1.2 Variable costing. system is used.

1.2 Prepare an income statement for Energize Ltd for January 2013 under the variable costing system.

problem2) COST–VOLUME–PROFIT ANALYSIS

Easy-Answer Ltd manufactures and sells telephone answering machine. Company’s income statement for the most recent year is given below:

                                            Total (R)                 Per unit (R)               Percentage
Sales                                  1200 000                      60                               100
Less: Variable expenses     (900000)                       45                                 ?
Contribution margin            300 000                        15                                 ?
Less: Fixed expenses         (240000)
Net income                         60 000

Management is anxious to improve company’s profit performance and has asked for several items of information.

Required:

2.1 Compute company’s contribution margin ratio (as a percentage).

2.2 Use breakeven formula to compute the company’s breakeven point in units and in Rands.

2.3 Compute the company’s margin of safety as a percentage.

2.4 Suppose that next year management wants the company to earn a minimum profit of R90000. How many units will have to be sold to meet this target profitfigure?

2.5 Suppose that sales increases by 4000 units next year. If cost relationships remain unchanged and selling price is constant, what will the company’s new net income be? (Draft a short marginal costing statement to support your answer.)

Managerial Accounting, Accounting

  • Category:- Managerial Accounting
  • Reference No.:- M93118

Have any Question? 


Related Questions in Managerial Accounting

Assignemnt decision making with managerial accountingdue to

Assignemnt: Decision Making with Managerial Accounting Due to varying business characteristics, the managerial accounting techniques applied in each business may differ. For example, a business in the start-up phase may ...

May airlines is a leading business in travelling industry

May Airlines is a leading business in travelling industry and has experienced turbulent times during the past 10 years due to stiff competition and as a result of global slowdown in the world economy. It has now emerged ...

Free cash flow you are considering an investment in cruise

Free Cash Flow: You are considering an investment in Cruise, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Cruise earned an EBIT of $206 million, paid taxes of $47 million, ...

Managerial accounting budgeting project- springthe

Managerial Accounting Budgeting Project- Spring The following is a Comprehensive Budgeting Problem. You and your team need to prepare a partial Master Budget and then continue on to analyze your data. This is an Excel ba ...

Factoring resource constraints into product mix

Factoring resource constraints into product mix decisions Rose Incorporated manufactures two types of vases, small and large. The following per-unit data are available.                                                 Sma ...

Assignmentpart 1use the following data for questions 1 and

Assignment Part 1 Use the following data for questions 1 and 2. Fox Company manufactures a specialty line of belts. The company uses a job-order costing system. Cost detail for the job follow: Units produced 5,000 belts ...

Tri-county cable services inc is organized with three

Tri-County Cable Services, Inc., is organized with three segments: Metro, Suburban, and Outlying. Data for these segments for the year just ended follow. Metro Suburban Outlying Service revenue $ 1,050,000 $ 850,000 $ 45 ...

Assignmentyou are a manager of table top limited a

Assignment You are a manager of Table Top Limited, a manufacturer of small tables . You have been instructed to prepare a budget for the next year's operations with the following forecast: The sales volume is forecast to ...

Managerial accounting assignmentanswering the questions and

Managerial Accounting Assignment Answering the questions and compiling your answers into a word processing document. 1. The work in process inventory account of a manufacturing company shows a balance of $3,000 at the en ...

Decision making under uncertaintyproblem descriptionmangers

Decision Making Under Uncertainty Problem Description Mangers deal with a number of decisions about processes, capacity, location, inventory, etc. The process of making a decision is complicated because of the uncertaint ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen