Coffeecup (Pty) Ltd operates a chain of coffee shops, with each shop making their own breads. Themanagement accountant of Coffeecup (Pty) Ltd is reviewing a proposal to open a new shop.The following estimates for the new shop are available:1. Standard price and variable costs:R per breadSales priceIngredientsElectricityContribution20.00(7.00)(1.00)12.002. Fixed cost per annum:RBread labourShop labourRent of bakery and shopTotal fixed costs per annum10 00010 00030 00050 0003. Budgeted sales per annum are 5 000 breads. Sales occurs evenly throughout the year. Assume365 days in a year.Required:Calculate the following figures for the proposed new shop. (Round all answers to the nearestconstant, i.e. no decimals):Q.1.5Coffeecup (Pty) Ltd wants to run a promotion during August. During this monthbreads will be sold at R18 each. This will lead to a monthly sales increase of 20%.Total fixed costs for August is expected to be R4 500 which will include additionaladvertising costs. Calculate the total expected profit for August.

Coffee cup Ltd.'s Estimated sales price per unit = R20.00 Variable cost per unit = R8.00 Fixed cost…

Answered: Coffeecup (Pty) Ltd operates a chain of…

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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Suppose Country Cafe restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.44 of ingredients, $0.28 of variable overhead (electricity run the oven), and $0.72 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation in the kitchen equipment and building) bases on the direct labor, County Cafe l assigns $1.05 of fixed overheard per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.72 per loaf. Requirements 1. What is the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Country Cafe's unit cost of making the bread
Liberty Coffee sells three small coffees for every large coffee. A small coffee sells for $3.00, with a variable expense of $1.50. A large coffee sells for $5.00, with a variable expense of $2.50.Requirements1. Determine the coffee shop’s monthly breakeven point in the numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of expenses: variable and fixed.2. Compute the coffee shop’s margin of safety in dollars.3. Use the coffee shop’s operating leverage factor (using the July contribution margin income statement) to determine its new operating income if sales volume increases 12%. Prove your results using the contribution margin income statement format. Assume that sales mix remains unchanged.
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Lukaku's Bakery is a local bakery that operates in Kuwait. Their controller is trying to determine the company's pizzas production cost behavior. January February March April May June Required: A. Use the high-low method to estimate: • The variable costs per unit produced • The total fixed costs ( Pizzas produced (X) 5,000 3,200 4,000 5,200 4,500 3,000 3). • Express the cost behavior in an equation form (1. Total Production Costs (Y) $4,300 $2,950 $3,300 $4,490 $3,450 $2,840 B. Predict the production cost that will be incurred when 5,500 pizzas are prepared ( C. Find the number of prepared pizzas if the total cost of production is $5,090 (
Define the following terms with example. RELEVANT COSTSUNK COSTOPPORTUNITY COSTAVOIDABLE AND UNAVOIDABLE COSTINCREMENTAL COSTBREAK-EVEN POINT(B)KPR manufactures installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: In RsAmount Sales 80,000 Variable expenses 32,000 Contribution margin 48,000 Fixed expenses -38,000 Net operating income 10,000 Required:Compute the company’s degree of operating leverage.Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in sales.Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 5% increase in sales.
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Question 1: A manufacturing firm wants to choose from amongst three different machines for its plant. A hand operated machine with fixed and variable costs of Rs 2000 and Rs 4 per unit respectively. A semi-automatic machine with fixed and variable cost of Rs. 8000 and Rs. 2 per unit and an automatic machine costing Rs. 20000 and Rs. 1 per unit. If the firm wants to produce 10,000 units then which machine should be selected (also write your comments)
Sandhill Cap Springs produces and sells water filtration systems for homeowners. Information regarding its three models is shown below. Units sold Basic 1,098 Unit selling price $245 Unit variable cost $197 Basic Plus 414 $395 $283 Premium Total 288 1.800 $800 $414 The company's total fixed costs to produce the filtration systems are $163,520.
Suppose Italian Grill restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.56 of ingredients, $0.21 of variable overhead (electricity to run the oven), and $0.75 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Grill assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.84 per loaf. Read the requirements. Requirements 1. What is the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Italian Grill's unit cost of making the bread. Direct material Direct labor Italian Grill Outsourcing Decision Variable overhead Variable cost per unit Plus: Fixed overhead per unit Cost per unit K
Required: Laguna Print makes advertising hangers that are placed on doorknobs. It charges $0.18 and estimates its variable cost to be $0.16 per hanger. Laguna's total fixed cost is $2,260 per month, which consists primarily of printer depreciation and rent. Calculate the number of advertising hangers that Laguna must sell in order to break even. Note: Round your intermediate calculation to 2 decimal places and final answer to the nearest whole number. Break-even Hangers
A company is looking to launch a new product line, which requires new facilities to be used and at the moment has two planned products, called ‘Basic’ and ‘Super’. The cost per unit is planned as follows: Basic Super Direct materials £20 £24 Direct labour £14 £16 While using the absorption costing approach, the company uses machine hours as the basis to charge its production overheads. One unit of Basic will use 3 machine hours while one unit of Super will use 4 machine hours. The business sells these products at a price that gives a standard profit mark-up of 30% of full cost. For the coming year, the company expects to make and sell 8,000 units of Basic and 6,000 units of Super. If the company adopts the ABC approach, the details relating to the…

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