Calculate breakeven in sales units and in sales value, Financial Accounting

Calculate breakeven in sales units and in sales value:

Tycoon makes and sells 600 toy cars per month.  Each toy car is sold for RM40 each.  Tycoon is currently producing at 50% of its full capacity.  At this level of output, the total costs are RM22,000 of which RM10,000 are fixed.  

Required:

(a)  Calculate the followings:

  • contribution margin per unit and ratio
  • breakeven in sales units and in sales value
  • Sales value in RM required to achieve $10,000 profit.

(b)  In achieving the $10000 profit, what is the margin of safety in RM value and ratio.

(c)  If Tycoon were to operate at full capacity, calculate the followings:

(i)   number of units produced that will be sold.

(ii)  total profit to be earned

(d) Prepare profit statement using marginal costing based on the current level of production and based on maximum capacity.

Question 2

The following trial balance has been extracted from the accounting records of Timmer Furniture for the year ended 31 October 2010:

 

RM

 

RM

Capital as at 1 November 2009

 

 

89,840

Motor vehicle - at cost

45,600

 

 

Office equipment - at cost

60,000

 

 

Provision for depreciation  -   motor vehicle

 

 

19,000

                                           -   office equipment

 

 

15,750

Purchases and Sales

295,320

 

479,740

Accounts receivable and payable

57,540

 

43,650

Discount allowed

14,590

 

 

Return outwards

 

 

12,480

Carriage outwards

24,540

 

 

Carriage inwards

3,510

 

 

Return inwards

14,650

 

 

Discount received

 

 

1,420

Rent and rate

23,750

 

 

Salaries

55,600

 

 

Electricity

11,830

 

 

Insurances

3,570

 

 

Sundry expenses

7,690

 

 

Bad debt expenses

7,650

 

 

Inventory at 1 November 2009

35,780

 

 

Bank overdraft

 

 

9,540

Provision for doubtful debts

 

 

2,320

Drawings

12,120

 

 

TOTAL

673,740

 

673740

 

The following information needs to be taken into account.

(i)     Inventory at 31 October 2010 was RM45,760.

(ii)    An insurance premium of RM2,400 covering the year to 31 December 2010 was paid on 2 January 2010.

(iii)   Salaries to be accrued amounted to RM2,500.

(iv)   Depreciate motor vehicle at 10% per annum using the straight-line method and office equipment at 20% using reducing balance method.

(v)    Debts of RM1,110 are deemed to be uncollectible.

(vi)   Provision for doubtful debts is to be adjusted to 5% of accounts receivable balance.

(vii)  During the year, Timmer took inventory worth RM1,150 from the business for his own private usage.

Posted Date: 2/14/2013 2:14:58 AM | Location : United States







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