[Question 3] Provision ple makes luxury hampers for sale in a chain of high-class department stores. The following financial information is available: $80 per hamper $15 per hamper $25 per hamper Wholesale price Labour and material costs Bought-in components Overheads $800,000 per year Current output and sales are set at 30,000 hampers per year, though the firm has the capacity to produce 50,000 hampers per year. a) Calculate the break-even quantity for the firm. b) Draw and fully label the break-even chart for the business. c) Identify the margin of safety. d) Calculate the level of profit the firm is making. Sales go well, but the buyer puts pressure on Provision to reduce its prices. In the following financial year Provision expects sales to reach 40,000, but at a price of $75 per hamper. Labour and materials costs, and bought-in items are expected to rise in price by 15%, but Provision is planning to cut its fixed costs by 10%. e) Calculate how these changes will affect Provision's break-even quantity, margin of safety and profitability.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Please assist with the attached.
![[Question 3]
Provision ple makes luxury hampers for sale in a chain of high-class department stores. The
following financial information is available:
Wholesale price
$80 per hamper
$15 per hamper
Labour and material costs
Bought-in components
$25 per hamper
Overheads
$800,000 per year
Current output and sales are set at 30,000 hampers per year, though the firm has the capacity
to produce 50,000 hampers per year.
a) Calculate the break-even quantity for the firm.
b) Draw and fully label the break-even chart for the business.
c) Identify the margin of safety.
d) Calculate the level of profit the firm is making.
Sales go well, but the buyer puts pressure on Provision to reduce its prices. In the following
financial year Provision expects sales to reach 40,000, but at a price of $75 per hamper.
Labour and materials costs, and bought-in items are expected to rise in price by 15%, but
Provision is planning to cut its fixed costs by 10%.
e) Calculate how these changes will affect Provision's break-even quantity, margin of
safety and profitability.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1cb2edfb-9d78-4fce-b39c-d9a0d22d3df3%2Fd20c9839-be76-40e4-bcb0-8b9f82aa3dc5%2Fi9s9b66_processed.png&w=3840&q=75)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
