The following are the unadjusted ledger balances of La Vie Limited for theyear ended 31 December 2023:Ordinary Share CapitalSalesTrade payablesReturns OutwardsPurchasesReturns InwardsCarriage outwardsCarriage inwardsRental expenseInsurance expenseSales and MarketingOffice salaries expenseCash at BankOpening Inventory at 1st January 2023Trade ReceivablesPlant and Machinery at costAccumulated Depreciation (1st January 2023: Plant and Machinery)Motor Vehicles at costRental expense owing as at 31 December 2023Depreciation for the year - Plant and EquipmentDepreciation for the year - Motor VehiclesIncome Statements for the year ended 31 December 2023La Vie LimitedMikie LimitedSalesCost of goods soldAdditional information needed for year-end adjustments, are as follows:Insurance for January 2024$800Closing Inventory, at 31 December 2023$3,500Irrecoverable debts to be written off$350$11,00010% using straight line method18% on costGross profitLess: Operating expensesNet ProfitThe following information of La Vie Limited and its competitor Mikie Limited isgiven below:$000100,000(55,000)45,000(18,000)27,000Closing InventoryTrade receivablesCash400,000480,00017,880720176,000480880500$00080,000(40,000)40,000(12,000)28,000$00019,0008,9203,28064,00021,00025,64020,00032,7007,40040,000400,00040,000150,000Extract of the assets of both the companies are provided as at 31December 2023La Vie Limited Mikie Limited$0006,0004,3001,015 Question 3(a) La Vie Limited sells computer stands. The target profit for the year is$500,000 with a selling price of $200 per unit. The production costs are asfollows:Variable cost per unit $160Annul fixed costs for the year is $800,000Required:(i) Calculate the breakeven point in units.The sales manager is considering increasing the price to $210 per unit, withan expected increase in sales volume.(ii) Calculate the new breakeven point in units if the selling price is increasedto $210 per unit.(iii) Briefly explain the reason for the difference in breakeven point before andafter the increase in the selling price of the computer stands.(b) Describe the three categorises of inventories found in manufacturingcompanies.(c) Listed below are the two types of cost behaviour, you are required todefine each type of cost behaviours.(i) Fixed Costs(ii) Variable Costs

The term "break even point" (BEP) refers to the volume of sales at which a company experiences…

Answered: Question 3 (a) La Vie Limited sells…

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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Halifax Products sells a product for $118. Variable costs per unit are $67, and monthly fixed costs are $168,300. a. What is the break-even point in units? Break-Even Point units b. How many units would need to be sold to earn a target profit of $102,000? Total Required Sales units c. Assuming they achieve the level of sales required in part b, what is the margin of safety in sales dollars? Margin of Safety
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