QUESTION # 1 a) In an accounting conference, discussion turned to the possibility of preparing financial statements from a few key accounts together with financial or cost ratios. The assistant controller of a participating firm provided the following data: Pretax income $ 2100000/-. Pre tax Income rate on sales 20%, Gross Profit rate 45%, Rate of marketing expense to sales 25%, 5% Bond Payable represent 37.5 % of the total liabilities of $ 1000000/-. Required: - An Income statement for the year based on the above information. b) If amongst the cost of goods sold in the above question 40% is Direct material and remaining is FOH and Direct Material. FOH is 75% of Direct labour. In the coming year it is expected that material would increase by 20% and amongst total FOH 40% is fixed. If margin rate is 40% and the ratio between Variable FOH and Direct Labour remains same find out the new selling price.
QUESTION # 1
a)
In an accounting conference, discussion turned to the possibility of preparing financial statements from a few key accounts together with financial or cost ratios. The assistant controller of a participating firm provided the following data: Pretax income $ 2100000/-. Pre tax Income rate on sales 20%, Gross Profit rate 45%, Rate of marketing expense to sales 25%, 5% Bond Payable represent 37.5 % of the total liabilities of $ 1000000/-.
Required: - An Income statement for the year based on the above information.
b)
If amongst the cost of goods sold in the above question 40% is Direct material and remaining is FOH and Direct Material. FOH is 75% of Direct labour. In the coming year it is expected that material would increase by 20% and amongst total FOH 40% is fixed. If margin rate is 40% and the ratio between Variable FOH and Direct Labour remains same find out the new selling price.
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