Question

In: Accounting

URGENT An extract from the income statement of PoMA Ltd for the previous year is given...

URGENT

An extract from the income statement of PoMA Ltd for the previous year is given below:                                                                                                             

                                                                                Rs.                          

Sales (50,000 units)                                         1,000,000

Direct materials                                                350,000                 

Direct labor cost (50,000 hours)                 200,000                 

Fixed manufacturing overhead                  210,000

Variable manufacturing overhead            50,000   

Administration overheads                           180,000                 

Selling and distribution overhead             120,000                 

                                                                                                                

The directors are keen to improve revenue and productivity and are considering various options.             You are the management accountant and are requested to compute the following:                                 

                                                                

a. If salesmen are paid commission of 10% of sales, how many units must be sold to achieve breakeven point.                     

                                                                

b. By how much does profit change (increase or decrease) if the selling price is reduced by 10% resulting in an estimated increase in sales volume (in number of units) by 30%.                                                            

                                                                

c. By how much does profit change (increase or decrease) if the direct labor rate is increased from Rs.4 to Rs.5 per hour. This increase is expected to increase production and sales by 20% without affecting the hours worked. However, advertising costs will increase by Rs.50,000.                                 

                                                                

d. How many units must be sold in order to achieve a target profit margin of 10% on sales (profit/salesx100) assuming that advertising costs will increase by Rs.300,000 and selling price will increase by 20%                                                                                                             

                                                                

e. What is the Margin of Safety at the sales volume derived in part d above (express as percentage of sales)                                                    

Solutions

Expert Solution

the solution is as follows

here for the solution all variable costs are varies according to laval of production hence it is adjusted as per that only.

incase of E requirement D volumeis taken and variable cost adjusted according to that volume only.

thank you......

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

(URGENT) An extract from the income statement of PoMA Ltd for the previous year is given...
(URGENT) An extract from the income statement of PoMA Ltd for the previous year is given below:                                                                                                                                                                                             Rs.                          Sales (50,000 units)                                         1,000,000 Direct materials                                                350,000                 Direct labor cost (50,000 hours)                 200,000                 Fixed manufacturing overhead                  240,000 Variable manufacturing overhead            50,000 Administration overheads                           180,000                 Selling and distribution overhead             120,000                                                                                                                                 The directors are keen to improve revenue and productivity and are considering various options.             You are the management accountant and are requested to compute the following:                                ...
An extract from the income statement of PoMA Ltd for the previous year is given below:                            &
An extract from the income statement of PoMA Ltd for the previous year is given below:                                                                                                                                                                                             Rs.                          Sales (50,000 units)                                         1,000,000 Direct materials                                                350,000                 Direct labor cost (50,000 hours)                 200,000                 Fixed manufacturing overhead                  190,000 Variable manufacturing overhead            50,000 Administration overheads                           180,000                 Selling and distribution overhead             120,000                                                                                                                                 The directors are keen to improve revenue and productivity and are considering various options.             You are the management accountant and are requested to compute the following:                                                                                                ...
The income statement for Sweetwater Ltd. is shown below: SWEETWATER LTD. Income Statement Year Ended December...
The income statement for Sweetwater Ltd. is shown below: SWEETWATER LTD. Income Statement Year Ended December 31 (in millions) 2018 2017 2016 Sales $ 1,603 $ 1,403 $ 1,205 Cost of goods sold 907 754 602 Gross profit 696 649 603 Operating expenses 516 407 401 Income from operations 180 242 202 Interest expense 80 50 40 Income before income tax 100 192 162 Income tax expense 25 48 41 Net income $ 75 $ 144 $ 121 Part 1...
3. CDE Ltd has provided the following budgeted Income Statement extract for the July-September quarter in...
3. CDE Ltd has provided the following budgeted Income Statement extract for the July-September quarter in 2020. July             August       September $,000               $’000               $’000 Sales (all on credit) 85                    88                    91 Purchases (43)                  (45)                 (47) Depreciation expense (5)                    (5)                   (5) Electricity expense (6)                    (6)                   (6) Other expenses (25)                  (25)                 (25) You are also given the following additional information: All sales are collected in cash the month after sale. All purchases are made on credit and paid for in cash the month...
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd....
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $ 7,360,000 $ 5,593,600 Cost of goods sold 4,680,000 3,509,500 Gross margin 2,680,000 2,084,100 Selling and administrative expenses: Selling expenses 1,388,000 1,075,500 Administrative expenses 705,500 616,500 Total expenses 2,093,500 1,692,000 Net operating income 586,500 392,100 Interest expense 101,000 94,000 Net income before taxes $ 485,500 $ 298,100 Members of the company’s board of directors are surprised...
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd....
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $ 7,380,000 $ 5,608,800 Cost of goods sold 4,650,000 3,512,000 Gross margin 2,730,000 2,096,800 Selling and administrative expenses: Selling expenses 1,400,000 1,075,000 Administrative expenses 708,500 613,500 Total expenses 2,108,500 1,688,500 Net operating income 621,500 408,300 Interest expense 105,000 91,000 Net income before taxes $ 516,500 $ 317,300 Members of the company’s board of directors are surprised...
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd....
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $ 7,370,000 $ 5,601,200 Cost of goods sold 4,760,000 3,507,500 Gross margin 2,610,000 2,093,700 Selling and administrative expenses: Selling expenses 1,380,000 1,073,500 Administrative expenses 709,500 615,000 Total expenses 2,089,500 1,688,500 Net operating income 520,500 405,200 Interest expense 106,000 89,000 Net income before taxes $ 414,500 $ 316,200 Members of the company’s board of directors are surprised...
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd....
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $ 7,400,000 $ 5,624,000 Cost of goods sold 4,610,000 3,509,500 Gross margin 2,790,000 2,114,500 Selling and administrative expenses: Selling expenses 1,386,000 1,080,500 Administrative expenses 706,500 608,000 Total expenses 2,092,500 1,688,500 Net operating income 697,500 426,000 Interest expense 104,000 84,000 Net income before taxes $ 593,500 $ 342,000 Members of the company’s board of directors are surprised...
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd....
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $ 7,320,000 $ 5,563,200 Cost of goods sold 4,660,000 3,510,500 Gross margin 2,660,000 2,052,700 Selling and administrative expenses: Selling expenses 1,383,000 1,072,500 Administrative expenses 704,000 613,500 Total expenses 2,087,000 1,686,000 Net operating income 573,000 366,700 Interest expense 105,000 84,000 Net income before taxes $ 468,000 $ 282,700 Members of the company’s board of directors are surprised...
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd....
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: McKenzie Sales, Ltd. Comparative Income Statement This Year Last Year Sales $ 7,310,000 $ 5,555,600 Cost of goods sold 4,670,000 3,509,000 Gross margin 2,640,000 2,046,600 Selling and administrative expenses: Selling expenses 1,393,000 1,074,000 Administrative expenses 705,000 610,000 Total expenses 2,098,000 1,684,000 Net operating income 542,000 362,600 Interest expense 103,000 85,000 Net income before taxes $ 439,000 $ 277,600 Members of the company’s board of directors are surprised...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT