MANAGEMENT ACCOUNTING
Topic: Break
– Even – Analysis
For:
Questions and answers, email: theotherwomaninmarriage@gmail.com
HERE IS THE B PART SOLUTION OF THE FIRST POST OF THE MANAGEMENT ACCOUNTING ILLUSTRATION
But here
is another way to solving this (a) part of this question. Let’s look at it
below:
First, we
start with the table:
PRODUCT
|
|
Wafer
|
Indomie
|
Cracker
|
Nut
|
Total
|
|
Sales (Carton)
|
25
|
20
|
30
|
25
|
|
|
Selling Price Per
Carton
|
1,500
|
1,250
|
1,600
|
1,400
|
|
|
Sales Revenue:
|
37,500
|
25,000
|
48,000
|
35,000
|
145,500
|
|
Variable Cost Per Carton:
Direct material:
Direct labour:
Direct expenses:
Variable
Overhead
|
750
375
625
10,000
|
500
400
300
9000
|
1350
900
600
16,000
|
1000
625
625
14,250
|
3,600
2,300
2,150
48,250
|
|
Variable Overhead Total
|
|
|
|
|
56,300
|
How did we
get the sales revenue figures? 1, 500 x 25=37,500 that is for Wafer. Indomie will be 1250 x 20 = 25,000 etc. Then we have the total of all the sales
revenue to be 145,500.
Then for
direct material, labour, expenses and variable overhead, look at the original
table figures and multiply then with by sales carton figures i.e. direct material
30 x 25=750. Direct labour figure 15 x 25 will give you 375 etc.
To get our
same contribution, we minus Total Sales revenue from Variable Overhead Total
i.e. 145,500 – 56,300 =89,200.
Remember we
have fixed cost of 54,000.
To compute
the CMR, we have to do something like this;
CMR= Total Fixed Cost
Total Contribution
= 54,000
89,200
=0.61
Which is
the same thing we got. I only show this
one, so that you have options to choose from. Which one will be quicker for you
in the day of judgment.
Now, let’s
move to part (a) of the question and answer it quickly- no more stories.
a.
Computation of Break Even Point in Sales.
B.E.P in
value or sales = fixed cost
CMR
We have our
fixed cost which is 54,000 and CMR which is 0.61
Just divide
them by 54,000
0.61
B.E.P in
value is N88,524.59
No comments:
Post a Comment