Answered: Palladium (Pty) Ltd would like to boost…

Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying a promotional discount of 20% to its product and incurring an additional fixed cost of R250 000, unit

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 56P: Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic...

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Question 4 Palladium (Pty) Ltd has given you the following information relating to normal (budgeted) information and its expected promotional information: Normal Data Weekly sales (units) Normal variable cost per unit Contribution margin % Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying a promotional discount of 20% to its product and incurring an additional fixed cost of R250 000, unit 150 000 RO,30 80% will be 2 and a half higher than normal sales. Normal variable cost per nit is expected to remain the same for the promotional period. The promotional period is expected to last six (6) weeks. REQUIRED: Q.4.1 Calculate the incremental profit (loss) that may arise from the promotion.
3.1 REQUIRED Calculate the following from the information given below: 3.1.1 Break-even quantity. 3.1.2 Break-even value using the marginal income 3.1.3 Margin of safety 3.1.4 Total Marginal Income and Net Profit/Loss if the sales price is reduced to R90 per unit.INFORMATION Dynamo Ltd manufactures calculators. The following information was extracted from the budget for the year ended 31 December 2023: Sales volume 20 000 units Selling price per unit R100 Variable manufacturing cost per unit R50 Variable marketing cost per unit 10% of the unit selling price Fixed manufacturing cost R400 000 Fixed administration and marketing costs R200 000
Question 3: Sohar Company's financial information is given in the table below. Year Sales (OMR) Fixed Costs Variable Costs 2019 405000 90000 225000 2020 450000 120000 240000 Calculate: a) PV ratio, ь) В.Е.Р. c) Sales required to earn a profit of OMR 40000. d) Margin of safety at a profit of OMR 50000 Profit when sales are OMR. 200000. e)
Question-3 3.1 REQUIRED Calculate the following from the information provided below: 3.1.1 Break-even value using the marginal income ratio 3.1.2 Margin of safety (in units) 3.1.3 Break-even quantity if a sales commission of 20% is introduced. INFORMATION Ascot (Pty) Ltd manufactures a single product and the following budget has been produced by the management accountant: Sales at R250 per unit Variable costs Fixed manufacturing, administrative and marketing costs All the units produced are expected to be sold. 3.2 R1 000 000 R600 000 R250 000 REQUIRED Use the information provided below to answer the following questions independently: 3.2.1 If Kempster Limited decides on a profit objective of R400 000, calculate the target sales volume. 3.2.2 Calculate the total Marginal Income and Profit/Loss if the company decides to reduce the selling price to R28 per unit. INFORMATION Kempster Limited expects to incur the following costs to produce and sell 20 000 units of its product at R30 each:…
Question 3: Mirbat Company's financial information is given in the table below. Year Sales (OMR) Fixed Costs 445000 500000 Variable Costs 2020 105000 245000 2021 150000 280000 You are required to calculate the following values for each year. The years are independent of each other. a) P/V ratio, b) B.E.P. c) Sales required to earn a profit of OMR 45000. d) Margin of safety at a profit of OMR 50000 e) Profit when sales are OMR. 300000.
Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Companys controller prepared the following budgeted income statement for the coming year: Required: 1. What is Arbergs variable cost ratio? What is its contribution margin ratio? 2. Suppose Arbergs actual revenues are 30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement 3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. 4. What is Arbergs expected margin of safety? 5. What is Arbergs margin of safety if sales revenue is 380,000?
Contribution Margin Ratio, Break-Even Sales, Operating Leverage Elgart Company produces plastic mailboxes. The projected income statement for the coming year follows: Required: 1. Compute the contribution margin ratio for the mailboxes. 2. How much revenue must Elgart earn in order to break even? 3. What is the effect on the contribution margin ratio if the unit selling price and unit variable cost each increase by 15%? 4. CONCEPTUAL CONNECTION Suppose that management has decided to give a 4% commission on all sales. The projected income statement does not reflect this commission. Recompute the contribution margin ratio, assuming that the commission will be paid. What effect does this have on the break-even point? 5. CONCEPTUAL CONNECTION If the commission is paid as described in Requirement 4, management expects sales revenues to increase by 80,000. How will this affect operating leverage? Is it a sound decision to implement the commission? Support your answer with appropriate computations.
Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and number of purchase orders. The controller for Dohini Manufacturing ran regression on the data, and the coefficients shown by the regression program are: Required: 1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 2. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 3. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) What is the total fixed purchasing cost? Why doesnt it equal the fixed cost calculated in Requirement 1?
Question 3: Sohar Company's financial information is given in the table below. Sales (OMR) Fixed Costs 405000 Year Variable Costs 2019 90000 225000 2020 450000 120000 240000 Calculate: a) PV ratio, b) B.E.P in units and Sales c) Sales required to earn a profit of OMR 40000.Each year is separate, you should calculate the required values for both years. d) Margin of safety at a profit of OMR 50000 e) Profit when sales are OMR. 200000.
Question 3 Study the information given below and answer: 3.3 Calculate the new total Marginal Income and Net Profit/Loss if an increase in advertising expense by R100 000 is expected to increase sales by 400 units. INFORMATION Samcor Limited manufactures tables. The following information was extracted from the budget for the year ended 30 June 2022: 1. 2. 3. 4. 5. Total production and sales Selling price per table Variable manufacturing costs per table: Direct material Direct labour Overheads Fixed manufacturing overheads Other costs: Fixed marketing and administrative costs Sales commission 2 400 units R1200 R288 R192 R96 R216 960 R144 000 5%
Using the data below compute of the following: Contribution margin per unit in 3. 2018, 4. 2019 5. 2020 BEP in sales units in 6. 2018 7. 2019 8. 2020 BEP in peso sales in 9. 2018 10. 2019 11. 2020 What is the required sales in unit for the desired Net profit 12. 2018 13. 2019 14. 2020 2018 2019 2020 Sales per unit Desired profit Fixed costs. P7.50 P9.00 P10.00 P15,000 P28,000 P30,000 360,000 375,000 420,000 Variable cost Cost per unit: Variable cost 2.50 4.00 4.00
QUESTION 3 REQUIRED Study the information provided below and calculate the following independently: 3.4 3.5 The total Marginal Income and Net Profit/Loss, if the selling price is adjusted to R90 per unit and the non-manufacturing fixed costs decrease by R20 000. The number of units that must be sold to earn a net profit of R1 440 000, if the variable costs increase by 10%. INFORMATION Ascot Ltd manufactures shirts. The following information was extracted from the budget for the month ended 28 February 2023: Sales Selling price per unit Direct material cost per unit Direct labour cost per unit Variable manufacturing overhead costs per unit Sales commission Fixed manufacturing overhead costs Fixed selling and administrative costs 50 000 units R100 R30 R18 R7 R5 per unit sold R400 000 R200 000