Reference no: EM13343585

Question-

Below is information regarding the account balances for Dixon's Engineering Ltd for the month ending 31 December 2011:

1 December 2011 31 December 2011

Inventories

- Raw Materials $14,000 $21,000
- Work in Process $32,000 $37,000
- Finished Goods $37,000 $44,000

Costs Incurred
- Direct Labour $72,000
- Factory Depreciation Expense $7,000
- Factory Supervisor Salaries $14,000
- Factory Utilities Expense $6,000
- Income Tax Expense $20,000

Charles Sturt University Subject Outline

ACC110 201230 S I-10 February 2012-Version 1 Page 15 of 21
- Indirect Labour $23,000
- Raw Material Purchases $62,000
- Sales Returns & Allowances $7,000
- Sales Salaries Expense $16,000

Required:

a) Prepare a Cost of Goods Manufactured Schedule for Dixon's Engineering Ltd for the month ending 31 December 2011.
b) Prepare an income statement (up to gross profit) for the same period assuming net sales are $ 240,000.

Question-

Broadbeach Ltd requires a cash budget for the month of October. The company's financial officer has provided the following information and assumptions:

i. The 1 October cash balance is expected to be $ 55,750.

ii. All sales are on account. Credit sales are collected over a three month period with 65% collectedin the month of sale, 30% in the month following sale, and 5% in the second month following sale.

iii. Actual sales for August and September were $ 85,500 and $ 78,100 respectively. October's sales are budgeted at $ 99,500.

iv. Marketable securities are expected to be sold for $ 54,000 during the month of October.

v. The financial officer estimates that direct materials totalling $ 75,300 will be purchased during October. 50% of a month's raw materials purchases are paid for in the month of purchase with the remaining 50% paid for in the following month. Accounts payable for September purchases total $22,900 which will be paid in October.

vi. October direct labour costs are expected to be $ 40,000.

vii. Manufacturing overhead is estimated to be 50% of direct labour costs, noting that approximately 10% of the manufacturing overhead is depreciation on factory buildings and equipment.

viii. Selling and administration expenses are budgeted at $ 48,000 for October. $22,000 of this amount is for depreciation.

ix. During October, Broadbeach Ltd plans to purchase a new delivery van costing $45,000. The company will pay cash for the van.

x.Broadbeach Ltd owes $ 12,000 in income tax and this will be paid in October.

xi. Broadbeach Ltd must maintain a minimum cash balance of $ 10,000 . To bolster the cash balance as needed, an open line of credit is available from the bank at 8% per annum interest.

Required: Prepare the following for Broadbeach Ltd:

a) A schedule of cash collections.

b) A schedule of cash payments for raw materials.

c) A cash budget for the month of October. Indicate any borrowing that will be necessary during the month.

Question -

Part A

Bellbird Ltd developed the following information regarding its product:
Sales Price $95/Unit
Variable Costs $67/Unit
Contribution Margin $28/Unit
Charles Sturt University Subject Outline
ACC110 201230 S I-10 February 2012-Version 1 Page 16 of 21
Total Fixed Costs $1,325,000

Required:

Answer the following independent questions and show computations using the contribution margin technique to support your answers (round your answers up or down to the nearest dollar/unit):

a) How many units must be sold to break even?

b) What is the total sales (in units and dollars) that must be generated for the company to earn a profit of $70,000?

c) If the company is presently selling 75,000 units, but plans to spend an additional $140,000 on an advertising program, how many additional units must the company sell to earn the same net profit it is now making?

d) Using the original data in the problem, calculate a new break even point in units if the unit sales price is increased 20%, unit variable costs is increased by 10%, and total fixed costs are increased by $200,000.

Part B

The 2011 income statement for Panorama Ltd is as follows:
PANORAMA LTD
Income Statement for the year ended 31 December, 2011
Sales (50,000 units) $ 1,250,000
Variable Costs $ 750,000
Contribution Margin $ 500,000
Fixed Costs $ 580,000
Net Profit (Loss) $ (80,000)
Required:

Answer the following independent questions and show computations using the contribution margin technique to support your answers:

a) What was the company's break-even point in sales dollars in 2011?
b) How many additional units would the company have had to sell in 2011 in order to earn a net profit of $50,000.
c) If the company is able to reduce variable costs by $2.50 per unit in 2012 and other costs and unit revenues remain unchanged, how many units will the company have to sell in order to earn a net profit of $60,000?