Assignment: 1. The company DAPSA Services Corp. has the following profit & loss account. Sales Direct materials Labor Depreciation Utilities Rental cost Commisions Transportation cost EBIT 10.000 5.000 2.000 1.000 500 1.000 Additional information regarding sales is that the average price per unit for las year was 1. a) Prepare the revised income statement and explain which of the cost lines is direct or indirect costs and why. (25 points) b) which is the contribution margin of the company? (5 points) c) What number of units must the company sell for break-even (5 points) d) What is the sales figure that the company need to achieve if the want to have an EBIT of 500? (5 points) e) What would be the EBIT if the company reduces salaries in 10% and increases sales in 10%? (5 points) f) The company receives a proposal of a customer that wants to buy 3000 units at a price discount of 25%. In this case this sale would not affect our traditional customers, they would not notice. Should we accept the order if we do not have capacity constrains? (5 points) g) What are the dangers of using CVP analysis? (5 points) 200 200 100 The CEO of the company has hired you as consultant to support him in his management decisions regarding prices and volumes. As you want to make a proper analysis so decide to make a revised income statement that employs a contribution margin format that will be useful in CVP analysis. For this purpose, you ask for additional information which is the split of the accounts: 2.-Would a lawyer use Job Costing or process Costing? Explain both types of costing. (10 points) 3.- Find below an income statement of company Manufacturing 4 US Corp. The data that is shows is related to the month 1. We are about to start the second month, but there is a big snowstorm that is blocking the transportation. We do have enough raw materials to produce during this month, and as the workers live nearby, they can also access the production plant. Our CEO has decided to continue with production, even though we will not be able to sell and deliver until month 3. 2000 1300 Labor Direct Plant manager Sales & Admin 100 600 1000 700 Depreciation Direct machinery Indirect installations Office furniture Please explain in detail which of the cost lines are product cost and which are period cost. Show a forecast of the Income statement for month 2. (35 points) 200 100 500 Utilities Plant 350 150 Offices Rental cost Office Plant 1000 500 500 Assignment: 1. The company DAPSA Services Corp. has the following profit & loss account. Sales Direct materials Labor Depreciation Utilities Rental cost Commisions Transportation cost EBIT 10.000 5.000 2.000 1.000 500 1.000 Additional information regarding sales is that the average price per unit for las year was 1. a) Prepare the revised income statement and explain which of the cost lines is direct or indirect costs and why. (25 points) b) which is the contribution margin of the company? (5 points) c) What number of units must the company sell for break-even (5 points) d) What is the sales figure that the company need to achieve if the want to have an EBIT of 500? (5 points) e) What would be the EBIT if the company reduces salaries in 10% and increases sales in 10%? (5 points) f) The company receives a proposal of a customer that wants to buy 3000 units at a price discount of 25%. In this case this sale would not affect our traditional customers, they would not notice. Should we accept the order if we do not have capacity constrains? (5 points) g) What are the dangers of using CVP analysis? (5 points) 200 200 100 The CEO of the company has hired you as consultant to support him in his management decisions regarding prices and volumes. As you want to make a proper analysis so decide to make a revised income statement that employs a contribution margin format that will be useful in CVP analysis. For this purpose, you ask for additional information which is the split of the accounts: 2.-Would a lawyer use Job Costing or process Costing? Explain both types of costing. (10 points) 3.- Find below an income statement of company Manufacturing 4 US Corp. The data that is shows is related to the month 1. We are about to start the second month, but there is a big snowstorm that is blocking the transportation. We do have enough raw materials to produce during this month, and as the workers live nearby, they can also access the production plant. Our CEO has decided to continue with production, even though we will not be able to sell and deliver until month 3. 2000 1300 Labor Direct Plant manager Sales & Admin 100 600 1000 700 Depreciation Direct machinery Indirect installations Office furniture Please explain in detail which of the cost lines are product cost and which are period cost. Show a forecast of the Income statement for month 2. (35 points) 200 100 500 Utilities Plant 350 150 Offices Rental cost Office Plant 1000 500 500
