Spicer sells electrical goods from three departments: Kitchen Equipment, Radios and TVs, and Home Computers. The following is the summarised Trading and Profit and Loss Account for the year ended 30 April 2004.

Further information 

1. Year-end stock taking reveals that damaged stock has been included in cost of sales as follows.

The goods have no disposable value. 

2. Computer equipment sales includes goods which have been sent to a customer on sale or return for $3000. The equipment cost $2000. It is not known if the customer is going to buy the equipment. 

3. Administration expenses of $30 000 have been divided equally between the three departments and included in fixed expenses. 

4. All other fixed expenses have been allocated as wholly attributable to the departments concerned.

Required 

(a) Calculate revised net profit figures for

 (i) Kitchen Equipment 

(ii) Radios and TVs 

(iii) Home Computers 

(iv) Spicer.

(b) Calculate the contribution which Home Computers has made to Spicer's profit. 

Spicer has decided to close the Home Computer department. This will not result in any reduction of administration expenses.  

(c) Calculate Spicers' profit for the year ended 30 April 2004 if the Home Computers department had been closed at 30 April 2003.

Transcribed Image Text:

Sales Less Cost of sales Gross profit Variable expenses Fixed expenses Net profit $000 30 40 Kitchen Equipment $000 $000 200 110 90 70 20 had 25 18 Radios & TVs $000 90 40 50 ann 43 w Home Computers $000 200 $000 60 35 ogrolubpib) een how In we 25 20 2018 1230 (5)