Biomed Pte Ltd produces a variety of syringes for the medical industry. One department makes a special syringe. The projected income statement of the department for the year ending 31 December 20X6 is as follows:

Special Syringe Department Budgeted Income Statement For the year ending 31 December 20X6

Sales (150,000 units @ $4 each) Less: Variable costs

Contribution margin Less: Fixed costs

Operating income

Required:

$

600,000 450,000 150,000 105,000

45,000

1. (a) Determine the contribution margin per unit and the breakeven point in units. (4 marks)

2. (b) Determine the contribution margin ratio, the breakeven sales and the margin of safety.

   (6 marks)

ACC202 Copyright 2018 Singapore University of Social Sciences (SUSS) Page 7 of 11 Examination January Semester 2018

(c) To increase revenue, the Marketing Director has proposed to increase the advertising budget by $110,000 as he expects this strategy would increase the sale revenue by $440,900. Describe how best to evaluate this and advise if the company should go ahead with the plan.

(6 marks)

(d) Currently, the Company is planning to set up a Managerial Accounting Department. Describe three (3) differences between Managerial accounting and Financial accounting.

(6 marks)

Question 4 Biomed Pte Ltd produces a variety of syringes for the medical industry. One department makes a special syringe. The projected income statement of the department for the year ending 31 December 20X6 is as follows Special Syringe Department Budgeted Income Statement For the year ending 31 December 20X6 Sales (150,000 units $4 each) 600,000 Less: Variable costs 450,000 Contribution margin 150,000 Less: Fixed costs 105,000 Operating income 45,000 Required (a) Determine the contribution margin per unit and the breakeven point in units. (4 marks) (b) Determine the contribution margin ratio, the breakeven sales and the margin of safety (6 marks) ACC202 Copyright 2018 Singapore University of Social Sciences (SUSS) Examination-January Semester 2018 Page 7 of 1 (c) To increase revenue, the Marketing Director has proposed to increase the advertising budget by 110,000 as he expects this strategy would increase the sale revenue by $440,900. Describe how best to evaluate this and advise if the company should go ahead with the plan. (6 marks) (d Crrently, the Company is planning to set up a Managerial Accounting Department. Describe three (3) differences between Managerial accounting and Financial accounting (6 marks)