2

a) The following data is extracted from the books of Dec Ltd as at 31^st Dec 201

1. Selling price = ksh 40 per unit
2. Variable manufacturing cost = ksh 10 per unit
3. Variable selling and administration cost = ksh 5 per unit
4. Fixed manufacturing cost = ksh 200,000
5. Fixed selling and administrative cost = ksh 100,000
6. Units produced and sold = 20,000 units

Required;

1. Prepare an income statement and determine the profit/loss as at 31^st Dec 2013. (4 Marks)
2. Determine the BEP in units and revenue for the period. (3 Marks)
3. Determine the BEP in units if the company would hence make a profit of ksh 200,000 at a tax bracket of 30%. (3 Marks)

b)

QEUSTION THREE

Electricity Ltd is an expanding private company in the electric trade.

Accounts prepared in January 1991 include the following information

Profit statement for the year ended 31^st December

	1989	1990
	f	f
Sales	2000	3200
Less: cost of goods sold	1100	1800
Gross profit	900	1400
Less: Trading expense : Trading profit	450 450	550 850
Less: Debenture interest	25	25
Net profit before taxation	425	825
Less: Corporation tax	160	320
Net profit after taxation	265	505
Less: Ordinary share dividend	125	175
Undistributed profit for the year	140	330

Required;

Computation of the following accounting ratios;

1. Return on capital
2. Assets turnover
3. Gross profit percentage
4. Net profit percentage
5. Current ratio
6. Quick/acid test ratio. (10 Marks)