Intro to Accounting 110.100

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Question 1:

1. B

2. B

3. D

4. B

5. A

6. C

7. B

8. C

9. B

10. B

11. C

12. B

13. A

14. A

15. C

16. D

17. A

18. C

19. C

20. B

21. B

22. A

23. D

24. D

25. B

Question 2:

A)

KOHA PRODUCTS LT

Projected Income Statement

For Month Ended 30th April 2005

Total sales revenue ($5000 x 50 rings) .............................................................$250,000

Less total variable costs:

Variable costs (direct labour, direct material, variable overheads) ..$80,000

Variable selling and distribution costs ..............................................$55,000

Total variable costs ............................................................................... ($135,000)

Total contribution Margin .................................................................................$115,000

Less total fixed costs

Fixed Overhead Costs .....................................................$21,000

Fixed Selling and Administration Costs .........................$25,000

Total fixed costs ...................................................................................... ($46,000)

PROFIT ...............................................................................................................$69,000

1. Contribution margin per unit = $2,300

$115,000 (total contribution margin) / 50 (rings)

2. Break-even = 20 rings

$46,000 (total fixed costs) / $2,300 (contribution margin p/unit)

3. Desired profit ($92,000) = 60 rings

($46,000 (total fixed costs) + $92,000 (desired profit)) / $2,300 (contribution margin p/unit)

4.

KOHA PRODUCTS LT

Projected Income Statement

For Month Ended 30th April 2005

Total sales revenue ($5000 x 50 rings) .............................................................$250,000

Less total variable costs:

Variable costs (direct labour, direct material, variable overheads) ..$80,000

Variable selling and distribution costs ..............................................$55,000

Total variable costs ............................................................................... ($135,000)

Total contribution Margin .................................................................................$115,000

Less total fixed costs

Fixed Advertising Costs....................................................$6,900

Fixed Overhead Costs .....................................................$21,000

Fixed Selling and Administration Costs .........................$25,000

Total fixed costs ...................................................................................... ($52,900)

PROFIT ...............................................................................................................$62,100

a. Break-even = 23 rings

$52,900 (total fixed costs) / $2,300 (contribution margin p/unit)

KOHA PRODUCTS LT

Projected Income Statement

For Month Ended 30th April 2005

Total sales revenue ($5650 x 50 rings) .............................................................$282,500

Less total variable costs:

Variable costs (direct labour, direct material, variable overheads) ..$80,000

Variable selling and distribution costs ..............................................$55,000

Total variable costs ............................................................................... ($135,000)

Total contribution Margin .................................................................................$147,500

Less total fixed costs

Fixed Advertising Costs....................................................$6,900

Fixed Overhead Costs .....................................................$21,000

Fixed Selling and Administration Costs .........................$25,000

Total fixed costs ...................................................................................... ($52,900)

PROFIT...
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