Ask Question, Ask an Expert


Ask Managerial Accounting Expert


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:
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.


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.


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.


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

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 ...

Kimberly manis an architect organized manis architects on

Kimberly Manis, an architect, organized Manis Architects on January 1, 2016. During the month, Manis Architects completed the following transactions: A. Issued common stock to Kimberley Manis in exchange for $20,000. B. ...

In the lan project activities c and d can be done

In the LAN project, activities C and D can be done concurrently. Suppose instead that activity C is an immediate predecessor of activity D. (Perhaps they use the same employees, and these employees can perform only one a ...

Both interest expense on borrowing and dividends on common

Both interest expense on borrowing and dividends on common stock reduce net assets and reduce shareholders' equity. Accountants treat interest as an expense in measuring net income but do not treat dividends on common st ...

Presented below are changes in the account balances of

Presented below are changes in the account balances of Al-Othman Company during the year, except for Retained Earnings. The only entries in Retained Earnings were for net income and dividends. Al-Othman declared dividend ...

Question 1 company xyz produces widgets among other product

Question 1. Company XYZ produces widgets among other product lines. The final process of manufacturing these widgets involves assembling several components parts together. Currently, Company XYZ manufactures all these co ...

Modern managerial accounting techniquesmanagerial

Modern Managerial Accounting Techniques Managerial accounting is changing rapidly as a result of technology and new types of enterprises. Below is an article that states the opposite (Talha et al, 2010). How can we recon ...

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 ...

Elroy who is single has taken over the care of his mother

Elroy who is single has taken over the care of his mother Irene in her old age. Elroy pays the bills relating to Irene's home. He also buys all the groceries and provides the rest of her support. Irene has no gross incom ...

Assignment - task specificationthis case study is designed

Assignment - Task Specification This Case Study is designed for you to demonstrate your abilities in relation to the following subject learning outcomes (see Subject Outline) Case Study - Seafarer Kayaks Your team (group ...

  • 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