MANAGEMENT ACCOUNTING
Topic: Break
– Even – Analysis
For:
Questions and answers, email: theotherwomaninmarriage@gmail.com
This one is from Past Questions:
ILLUSTRATION:
Dangote Plc is planning its
production for next year. The accountant
has given the following data for the current period:
PRODUCT
|
|
Wafer
|
Indomie
|
Cracker
|
Nut
|
|
Sales (Carton)
|
25
|
20
|
30
|
25
|
|
Selling Price Per Carton
|
1,500
|
1,250
|
1,600
|
1,400
|
|
Variable Cost Per Carton:
Direct material:
Direct labour:
Direct expenses:
Variable Overhead
|
30
15
25
400
|
25
20
15
450
|
45
30
20
500
|
40
25
25
570
|
Fixed Overhead per annum is
N54,000.
Required:
Calculate the following:
a.
The contribution to sales ratio
b.
The break-even-point in value of sales
c.
The profit at the total sales value
d.
The margin of safety at the total sales value in C.
e.
The break-even-point in value of sales if the sales
value increase by 40%.
SOLUTION PART A OF THE QUESTION:
DANGOTE PLC
a.
Computation of contribution sales ratio
Contribution
to sales ratio = contribution
Sales
1,500 – 470
= N1, 030
Contribution
to sales = N1030
N1500
CMR = 0.69
Explanation:
Wafer =
N1,500 – N470 (i.e 30 + 15+25+400 = N470).
This N470 is gotten from the column of Wafer. That is the variable which
is N470 minus the selling price which is N1,500 will give us N1030. Then divide
N1030 by the selling price of N1500 you will give 0.69. That is how we got the
0.69 above.
Now we
compute for Indomie column. The same way ok.
Indomie:
N1250-510 =
N740.
CMR = N740
N510
CMR = 0.59
For
Cracker:
N1,600 –
N595=N1005
CMR = N1005
N1600
CMR = 0.63
For: Nuts:
N1400 –
N660=N740
CMR = N740
N1400
CMR = 0.53
Now: the
Total CMR = 1030+740+1005+740
1500+1250+1600+1400
We all know how we got
the above and figure? The top figures 1030+740+1005+740 are from the CMR, just
look at our solving steps while the one below it 1500+1250+1600+1400 are from
the selling price each. When you add them together, this is what you get below:
= N3,515
N5,750
The Total
CMR is = 0.61
No comments:
Post a Comment