Question 1:
Jian, Rarimbal and Dan are considering setting up a company providing 2 hour hot air balloon trips for groups of 10 tourists at a time. The trips will include some food and drink for the tourists.
They have done some market analysis and believe it is feasible to charge a price of $1,000 for each group of 10 tourists.
Further, they have gathered some data on the likely costs of the business as below:
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Variable costs
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Fuel
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$ 150
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Wages of pilot
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$ 500
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Food & drink
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$ 100
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Fixed costs per month
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Rental of balloon
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$ 5000
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Insurance
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$ 1100
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Transport & storage
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$ 500
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Maintenance
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$ 800
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REQUIRED:
1. Calculate:
a) The number of balloon rides required each month to break even.
b) The sales revenue required each month to break even.
c) The number of balloon rides required to make a profit of $10,000 each month.
Question 2:
Now assume that the company will be subject to an effective tax rate of 20%. In addition, assume that the business decides to pay salespeople a 5% commission fee on every trip (for groups of 10) sold and also pay an advertising agency $2000 per month to advertise the business. Calculate the number of balloon rides and the sales revenue required to make an after tax profit of $10,000.
Timber Garden Sheds Pty Ltd incurred the following costs for job number SH400, which consisted of 500 flat pack sheds for sale to a hardware store.
Direct material:
1 December Requisition no. 520: 900 metres of timber @ 8.50 per metre
16 December Requisition no. 101: 600 metres of metal panels @ $4.40 per metre
Direct labour:
16 December Timesheet no 72: 500 hours@$24 per hour
Manufacturing overhead:
Applied on the basis of direct labour hours @$12 per hour
Additional information:
Job SH400 was completed on 16 December.
REQUIRED:
Prepare a job cost sheet including dates & requisition / timesheet numbers and record the information given above and also a cost summary for job SH400.