Question 4: During the FY 2020-21, P Limited has produced 60,000 units operating at 50% capacity level. The cost structure at the 50% level of activity is as under: (RO) Direct Material 300 per unit Direct Wages 100 per unit Variable Overheads 100 per unit Direct Expenses Factory Expenses (25% fixed) Selling and Distribution Exp. (80% variable) 40 per unit Office and Administrative Exp. (100% fixed) 20 per unit The company anticipates that in FY 2021-22, the variable costs will go up by 20% and fixed costs will go up by 15%. 60 per unit 80 per unit The selling price per unit will increase by 10% to RO 880 Required: (i) CALCULATE the budgeted profit/ loss for the FY 2020-21. (ii) company at 50% and 60% level of activity and FIND OUT the profits at respective levels. PREPARE an Expense budget on marginal cost basis for the FY 2021-22 for the

Question 4: During the FY 2020-21, P Limited has produced 60,000 units operating at 50% capacity level. The cost structure at the 50% level of activity is as under: (RO) Direct Material 300 per unit Direct Wages 100 per unit Variable Overheads 100 per unit Direct Expenses Factory Expenses (25% fixed) Selling and Distribution Exp. (80% variable) 40 per unit Office and Administrative Exp. (100% fixed) 20 per unit The company anticipates that in FY 2021-22, the variable costs will go up by 20% and fixed costs will go up by 15%. 60 per unit 80 per unit The selling price per unit will increase by 10% to RO 880 Required: (i) CALCULATE the budgeted profit/ loss for the FY 2020-21. (ii) company at 50% and 60% level of activity and FIND OUT the profits at respective levels. PREPARE an Expense budget on marginal cost basis for the FY 2021-22 for the

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CMA

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Question 1: Estimation of WC The management of ABC Company Limited has called for a statement showing the WC needed to finance a level of activity of 3,00,000 units of output per year. The cost statement of the company's product, for the above-mentioned activity level, is given below: Cost per unit TK 20 Direct material Direct labor Overhead Total cost Target profit Target selling price 5 TK 15 40 10 TK 50 1. Past records show that raw materials are held in stock, on an average, for two (2) months; 2. Work in process (WIP) will approximate to 15 days production; 3. Finished goods remain in warehouse on average for 1 month; 4. Suppliers for materials extend one month's credit; 5. Two months credit is normally allowed to customers (assume all sales are on credit) 6. A minimum cash balance of TK 5,00,000 is expected to be maintained; 7. The production pattern is assumed to be even during the year. Prepare a Statement of Working Capital Requirements
(b) Additional information regarding the costs of the company are given: Manufacturing costs Variable cost per unit Budgeted fixed manufacturing overhead per year $32,400,000 $25 Selling and administrative costs Variable cost per unit Total fixed cost $5 $5,000,000 Actual production in 2020 7,600,000 units Actual Sales in 2020 7,000,000 units Selling price Actual fixed manufacturing overhead in 2020 $50 per unit $32,000,000 The practical capacity level is used to calculate the budgeted fixed manufacturing cost per unit. There are no variable cost variances. Fixed manufacturing overhead cost variances are written off to cost of goods sold in the period in which they occur. There has been no beginning inventory in 2020.
Practice 1:The following data has been extracted from the operating records of HPPT SolutionSdn Bhd for the last two quarters of the year to 31 December 2020: Quarter 3Production units 7,000Sales units 5,500RMSelling price per unit 100Variable manufacturing cost per unit:Direct material cost 20Direct labor cost 15Variable overheads 10Fixed production overheads are budgeted at RM120,000 for a budgeted productionof 8,000 units per quarter. These overheads are absorbed on per unit of productionbasis.Non-production overheads comprised:Fixed administration expenses RM40,000 per quarter.Selling and distribution expenses are 10% of sales.You are required to prepare an income statement under:(a) Marginal costing and(b) Absorption costing.
Example 3: Wouie Corporation During the year 2020, Wouie Corporation's production was equal to its normal capacity of 1,000 units. It sold 900 units at a price of P50 per unit. The following costs were incurred during the year: Total Cost Cost per unit Direct Materials P12,000 P12 Direct Labor 10,000 10 Variable FOH 8,000 8 Fixed FOH 6,000 9. Variable Selling & Admin 4,500 Fixed Selling & Admin 3,000 3. Required: 1. Product Cost per unit under Absorption & Variable Costing. Income under Absorption & Variable Costing. Reconciliation of Absorption Income & Variable Costing Income
Exercise 1: Company B has the following information for the year 20XO: Sold units Sales price per unit Unit variable cost Total fixed cost (interest cost of $160,000 included) Operating assets at the beginning of the year Operating assets at the end of the year Requirements: 50,000 $160 $96 1,360,000 $18,000,000 $22,000,000 a. Calculate the ROI for the year. b. Given that the minimum required rate was 8% per year, calculate the RI for the year. c. In 20X1, an improvement is taken in order to save the direct material cost. A saving of $200,000 is achieved. With the other information remains unchanged, calculate the ROI of 20X1.
Calif Corp provided the following information during the year 2024: Sales (1200 units)) Current year's production (1,500 units) Direct materials P720,000 P100/unit Direct Labor P200/unit Manufacturing overhead (505fixed; 50% 40% of directlabor variable) Selling, general and administrative expenses Fixed P80,000 P60,000 Variable Task - Determine the operating income and ending inventories under the following: 1. Full costing 2. Variable costing 3. Throughput costing
Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2019. HUDSON Co. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,600 units at $300 each) Variable costs (10,600 units at $240 each) Contribution margin $3,180,000 2,544,000 636,000 480,000 $ 156,000 Fixed costs Pretax income $ 1. Compute Hudson Co's break-even point in units. 2. Compute Hudson Co.'s break-even point in sales dollars. 1. Break-even point units 2. Break-even point
Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and P2). The distribution of each service department’s efforts (in percentages) to the other departments is: To From S1 S2 P1 P2 S1 - 10% 20% %? S2 10% - %? 30% The direct operating costs of the departments (including both variable and fixed costs) are: S1 $ 225,000 S2 75,000 P1 62,000 P2 180,000 Required: 1. Determine the total cost of P1 and P2 using the direct method. 2. Determine the total cost of P1 and P2 using the step method. 3. Determine the total cost of P1 and P2 using the reciprocal method.
Required information [The following information applies to the questions displayed below.] Hudson Co. reports the contribution margin income statement for 2019. HUDSON Co. Contribution Margin Income Statement For Year Ended December 31, 2019 Sales (10,600 units at $300 each) Variable costs (10,600 units at $240 each) Contribution margin $3,180,000 2,544,000 636,000 480,000 Fixed costs Pretax income 156,000 1. Assume Hudson Co. has a target pretax income of $172,000 for 2020. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target pretax income for 2020, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) 1. Amount of sales 2. Margin of safety
6. .Using the algebraic method, department B's cost allocated to department C is: а. Р 7,794 b. P13,192 c. P14,021 d. P29,021
4. JV Company began operations on Jan. 1, 2020 and produces a single product that sells for P7 per unit. Standard capacity is 100,000 units per year. 100,000 units were produced and 80,000 units were sold in 2020. Manufacturing costs, selling and administrative expenses were as follows: Fixed Costa Variable Costs PL.50 per unit produced P1.00 per unit produced PO.50 per unit produced PO.50 per unit sold Raw materials Direct labor Factory overhead Selling & Administrative P150,000 P80,000 There were no variances from the standard variable costs. Any under or over-applied overhead is written off directly at the year-end adjustment to cost of goods sold. In presenting inventory on the balance sheet at Dec. 31, 2020, the unit cost under absorption is d. P4.50 b. P3.00 с. Р3.50 e. None of these; answer is a. P2.50 5. Refer to no. 4. What is the net income for the year under direct costing? a. P50,000 b. P80,000 c. P90,000 d. Pi20,000 e. None of these; answer is
Special Order Total cost data follow for Greenfield Manufacturing Company, which has a normal capacity per period of 20,000 units of product that sell for $54 each. For the foreseeable future, regular sales volume should continue to equal normal capacity. Direct material Direct labor Variable manufacturing overhead $272,800 206,000 158,000 Fixed manufacturing overhead (Note 1) Selling expense (Note 2) 118,800 129,600 Administrative expense (fixed) 50,000 $935,200 Notes: 1. Beyond normal capacity, fixed overhead costs increase $4,500 for each 1,000 units or fraction thereof until a maximum capacity of 24,000 units is reached. 2. Selling expenses consist of a 10% sales commission and shipping costs of $1 per unit. Greenfield pays only one-half of the regular sales commission rates on sales amounting to $3,000 or more. Greenfield's sales manager has received a special order for 2,500 units from a large discount chain at a price of $44 each, F.O.B. factory. The controller's office has…