MANAGEMENT ACCOUNTING - ASSIGNMENT NO.1

For questions and answers, email theotherwomaninmarriage@gmail.com  

ASSIGNMENT 1

DACHIN AND OGALE Plc is a company located in Benue State.  The firm produces three products with the following cost and demand data.

Product:                               Emma                   Raphael                               Godwin

CMR%                                   20                           25                                           30

                                                N000                      N000                                      N000

Max Sales                             1,600                       2,000                                     3,000

Min Sales                               200                         200                                         200

There are fixed cost of N1,400,000 per period.

As a student of Management Accounting, the directors of Dachin and Ogale Plc have approached you to generate computations for the lowest Break-Even Sales value per period subject to meeting the minimum sales value.

SOLUTION:

DACHIN AND OGALE PLC

Computation of Break-Even Point in Value Subject to Meeting the Minimum Sales Value

Break – Even Point in Value:=                  Fixed Cost_______

                                                                Contribution Margin Ratio

Fixed Cost =       N1,400,000

For Emma:

CMR = 20%         =               Contribution

                                                        Sales

                20%        =                Contribution

                                                      200,000

                0.20        =             Contribution

                   1                             200,000

                Cross multiply the above:

Contribution: = 40,000

For Raphael:

CMR = 25%         =               Contribution

                                                        Sales

                25%        =                Contribution

                                                      200,000

                0.25        =             Contribution

                   1                             200,000

                Cross multiply the above:

Contribution: = 50,000

For Godwin:

CMR = 30%         =               Contribution

                                                        Sales

                30%        =                Contribution

                                                      200,000

                0.30        =             Contribution

                   1                             200,000

                Cross multiply the above:

Contribution: = 60,000

Total Contribution Margin Ratio;

=    40,000 + 50,000 + 60,000                        =   150,000

  200,000 + 200,000 + 200,000                           600,000     = 0.25

B.E.P in value = N1,400,000

                                    0.25        =         N5,600,000

EMMA:

20% x N5,600,000             =                             N1,120,000

RAPHAEL:

25% x N5,600,000             =                             N1,400,000

GODWIN:

30% x N5,600,000             =                             N1,680,000

Note: This is  Assignment 1:  Please, you don’t need to retype but just hand write it as you normally do for all assignments. I will post Assignment 2 in a moment.

Best luck.