table deplcts the ageted sales and per an English manufacturer (Toys Ltd.) of two different children's toys, both of which are produced in the same factory: IB BSc SS 2020 Product A B Budgeted sales (units) 2500 3000 £ £ Sales price per unit 40 39 Material 12 Labour 12 20 Variable overheads 5 4 Fixed overhead per unit 10 Total cost per unit 35 40 Profit per unit 5 -1 (a) Calculate the contribution per unit and total contribution for each of the two products. Since product B is unprofitable, calculate its break-even output i.e. sales quantity. Should management discontinue its production? Explain and justify your answer. (b) packaging machine. For a total investment of £10,000, Fixed Overhead Cost can be reduced by £5,000 and the per unit cost of material and labor can both be reduced by 10%, for both Consider Toys Ltd. again. Assume that the production manager is considering a new products. Calculate the impact of such a scheme on total profits. Should they accept or reject this new scheme?

table deplcts the ageted sales and per an English manufacturer (Toys Ltd.) of two different children's toys, both of which are produced in the same factory: IB BSc SS 2020 Product A B Budgeted sales (units) 2500 3000 £ £ Sales price per unit 40 39 Material 12 Labour 12 20 Variable overheads 5 4 Fixed overhead per unit 10 Total cost per unit 35 40 Profit per unit 5 -1 (a) Calculate the contribution per unit and total contribution for each of the two products. Since product B is unprofitable, calculate its break-even output i.e. sales quantity. Should management discontinue its production? Explain and justify your answer. (b) packaging machine. For a total investment of £10,000, Fixed Overhead Cost can be reduced by £5,000 and the per unit cost of material and labor can both be reduced by 10%, for both Consider Toys Ltd. again. Assume that the production manager is considering a new products. Calculate the impact of such a scheme on total profits. Should they accept or reject this new scheme?

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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QUESTION 2- COST-VOLUME -PROFIT (CVP) Analysis Question matics Incorporated manufactures flat-screen television sets. The company’s contribution format income statement for 2021 is given below: Total Per Unit Percentage of Sales Sales (25,000 units) $ 2,500,000 $ 100 100% Less variable expenses $ 1,500,000 $ 60 ? % Contribution Margin $ 1,000,000 $ 40 ? % Less Fixed Expenses $ 800,000 Operating Income $ 200,000 Management believes operating income can be further improved and would like you to prepare the following analysis: Required: Compute the company’s Contribution Margin ( CM ) ratio and variable expense ratio. Compute the company’s break-even point in both units and sales dollars.Use the equation method Assume that sales increase by $ 600,000 next year. If cost behaviour patterns remain unchanged, by how much will the company’s operating income increase. Use the Contribution Margin (CM) ratio to…
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Question 3 Ashale Botwe Ltd has the following cost and expense data for the year ending December 31, 2022. Direct materials (GHC) Work in process (GH¢) Finished goods (GH¢) Insurance factory Property taxes on factory building Materials purchases Sales Indirect materials Delivery expenses Sales commissions Indirect labour 1/1/22 Factory machinery rent Factory utilities Direct labour 30,000 80,000 110,000 Other items of revenue and cost during the year are as follows: (GHC) 31/12/22 20,000 50,000 120,000 Direct materials used b) Total manufacturing cost c) Statement of cost of goods manufactured d) Prime cost e) Conversion cost f) Cost of goods available for sale g) Cost of goods sold h) Gross profit i) Period cost j) Net income 14,000 6,000 205,000 1,500,000 15,000 100,000 150,000 90,000 40,000 ARI 65,000 350,000 24,000 35,000 300,000 Depreciation, factory building Factory manager's salary Administrative expenses For the year 2022, you are required to compute the following:
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