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

When bonds are issued at other than par value a discount or

When bonds are issued at other than par value, a discount or premium is recorded. This discount or premium is amortized over the life of the bond. However, a callable bond may be retired before the maturity date, which l ...

A company had liabilities of 69300 at april 30 the current

A company had liabilities of $69,300 at April 30. The current ratio at that date was 1.7. Assume that management paid $12,7000 of accounts payable on April 29. What is the current ratio and working capital at April 30 as ...

Task specificationthis case study is designed for you to

Task Specification This Case Study is designed for you to demonstrate your abilities in relation to the following subject learning outcomes Learning Outcomes a) Analyse the links between management accounting, customers, ...

1case study a faulty budget clo 4 due by day 7 read case

1. Case Study: A Faulty Budget [CLO: 4]. Due by Day 7. Read Case Study 1-8: A Faulty Budget in Chapter 1, page 50 of your text. In two to three pages, supported by evidence from your text and from other research (at leas ...

Assume the same facts as in problem 30 except that mike

Assume the same facts as in Problem 30, except that Mike sells his land to a third party for $100,000 and then contributes that cash to the partnership in addition to the original $40,000 contribution. The partnership lo ...

Write the given assignmentfinancial managementnote for part

Write the given assignment. FINANCIAL MANAGEMENT Note: For part three of question B there is an article i attached you have to consider that to answer part three of question B. Part A Q1.i) What factors determine the exp ...

Assignment-learning objectives-1 to demonstrate an

ASSIGNMENT- Learning objectives- 1: To demonstrate an understanding of applied a research problems in management accounting, and prepare strategies for their solution 2: To demonstrate an understanding of applied researc ...

This is an assignment consisting of two parts part a and

This is an assignment consisting of two parts , Part A and Part B. Part A Report format is to be used for this part Transfer pricing is used when products or services are transferred  between different divisions of the s ...

Question 1 job costinga create a spreadsheet solution to

QUESTION 1 Job costing A. Create a spreadsheet solution to the following problem. Follow the template provided. Play the Job cost podcasts and work through the example problem in those podcasts. Design your spreadsheet t ...

Lucent technologiesrequired1 conduct a dupont decomposition

LUCENT TECHNOLOGIES REQUIRED 1. Conduct a DuPont decomposition of Lucent's ROE for each quarter of 1998, 1999 and 2000 (December 1999 is fiscal year 2000's first  quarter). What factors contributed to the differences in ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate