(b) Boxvile company limited which manufactures leather boxes has provided the followingstatements:SalesMaterial CostLabour costVariable overheadsi)ii)iii)Fixed overheadsProfitiv)Sh.450,000300,000120,000440,000Sh.1,500,000The budgeted capacity of the business is Sh. 2,000,000 but the key factor is sales. Thecompany proposes to use the existing capacity by reducing the selling price by 5%.1,310,000190,000Required:Prepare a forecast statement which should show the effect of the proposal to reduce theselling price and include any changes in costs expected during the coming year. Thefollowing additional information is available.Sales forecast after price reduction Sh. 1,900,000.Direct material cost to increase by 2%.Wages are to increase by 5% per unit.Variable overhead cash to increase by 5% per unit as fixed overheads increase by Sh.20,000.

Budget is the estimation of revenue and expense prior to start the operation. To manage the working…

Boxvile company limited which manufactures leather boxes has provided the following statements: Sales Material Cost Labour cost Variable overheads Fixed overheads Profit i) ii) iii) iv) Sh. 450,000 300,000 120,000 440,000 Sh. 1,500,000 1,310,000 190,000 The budgeted capacity of the business is Sh. 2,000,000 but the key factor is sales. The company proposes to use the existing capacity by reducing the selling price by 5%. Required: Prepare a forecast statement which should show the effect of the proposal to reduce the selling price and include any changes in costs expected during the coming year. The following additional information is available. Sales forecast after price reduction Sh. 1,900,000. Direct material cost to increase by 2%. Wages are to increase by 5% per unit. Variable overhead cash to increase by 5% per unit as fixed overheads increase by Sh. 20.000

Boxvile company limited which manufactures leather boxes has provided the following statements: Sales Material Cost Labour cost Variable overheads Fixed overheads Profit i) ii) iii) iv) Sh. 450,000 300,000 120,000 440,000 Sh. 1,500,000 1,310,000 190,000 The budgeted capacity of the business is Sh. 2,000,000 but the key factor is sales. The company proposes to use the existing capacity by reducing the selling price by 5%. Required: Prepare a forecast statement which should show the effect of the proposal to reduce the selling price and include any changes in costs expected during the coming year. The following additional information is available. Sales forecast after price reduction Sh. 1,900,000. Direct material cost to increase by 2%. Wages are to increase by 5% per unit. Variable overhead cash to increase by 5% per unit as fixed overheads increase by Sh. 20.000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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