Question

1 Approved Answer

Posted on Sep 11, 2024

Harsh Electrical: Analyzing cost in search of profit Prepare a cost of goods sold statement for Harsh Electrical Considering Harsh Electrical's product and period costs,

Harsh Electrical: Analyzing cost in search of profit

Prepare a cost of goods sold statement for Harsh Electrical
Considering Harsh Electrical's product and period costs, create a projected income statement for the calendar year 2014.
Calculate Harsh Electricals' Break Even Point (BEP) in terms of units and volume
Calculate the number of units that Harsh Electricals must sell to match the level of profit earned in financial year 2010-2011.

EXHIBIT 1: HARSH ELECTRICALS INCOME STATEMENTS, 200809 TO 2012-13 (INT) 2008-09 2009-10 2010-11 2011-12 2012-13 3,960,000 4,560,000 5,052,000 4,335,000 4,050,000 2,991,000 3,285,000 3,713,220 3,208,000 3,120,000 969,000 1,275,000 1,338,780 1,127,000 930,000 96,000 156,000 170,000 186,000 175,000 66,000 72,000 73,000 75,000 84,000 22,000 56,000 64,000 93,000 151,000 Sales Cost of Goods Sold Gross Profit Marketing and Promotional Expenses General and Administrative Expenses Repair and Replacement Costs Earnings before Interest, Depreciation, and Amortization Depreciation and Amortization Earnings before Interest and Tax Interest Profit before Tax Tax Net Income 785,000 991,000 1,031,780 773,000 520,000 54,000 731,000 0 731,000 87,720 643,280 54,000 937,000 0 937,000 112,440 824,560 54,000 977,780 0 977,780 117,334 859,846 54,000 719,000 0 719,000 86,280 632,720 54,000 466,000 0 466,000 55,920 410,080 Note: * = INR - Indian rupee; US$1 = 39.94 on April 1, 2008; US$1 = 54.35 on April 1, 2013. Source: Company records. EXHIBIT 2: DETAILS OF FIXED ASSETS FOR HARSH ELECTRICALS Asset Plant and Machinery Workshop Furniture and Fixtures Office Furniture and Fixtures Computer and Software Cost (in **) 320,000 40,000 60,000 80,000 Life (in years) 5 10 10 5 Salvage Value (in) 20,000 NIL NIL NIL Note: * = INR - Indian rupee; US$1 = 54.35 on April 1, 2013. Source: Company records. EXHIBIT 3: HARSH ELECTRICALS RAW MATERIAL COMPONENTS, COST, AND INVENTORY HOLDING PERIODS Raw Material Component Cost for Baleno Model (in 5) Inventory Holding Period (in Days) Credit Period (in Days) Cost for Standard Model (in ) 650 500 90 168 830 630 1 10 10 10 0 14 14 110 205 14 Body Motor Pump Blade, Clamp, and Wiring Pipe, Water Distributor, and Panel Set Diverter Packing (Cartons and Labelling) Wheel (Set) Total 190 110 40 30 1,778 210 110 50 40 2,185 leeeeeee 0 0 10 10 10 0 10 0 Note: * = INR = Indian rupee; US$1 = 54.35 on April 1, 2013. Source: Company records. EXHIBIT 4: HARSH ELECTRICALS MONTHLY ELECTRICITY CONSUMPTION Item Off-Season Consumption (in kWh or Units) 10 units (for Maintenance) Plant and Machinery Peak-Load Consumption (in kWh or Units) 1 unit per Standard model + 1.5 units per Baleno model + 10 units for Maintenance 300 50 100 Factory Lighting Personal Computer Office Lighting 100 20 40 Note: kWh = kilowatt hours Source: Company records. EXHIBIT 1: HARSH ELECTRICALS INCOME STATEMENTS, 200809 TO 2012-13 (INT) 2008-09 2009-10 2010-11 2011-12 2012-13 3,960,000 4,560,000 5,052,000 4,335,000 4,050,000 2,991,000 3,285,000 3,713,220 3,208,000 3,120,000 969,000 1,275,000 1,338,780 1,127,000 930,000 96,000 156,000 170,000 186,000 175,000 66,000 72,000 73,000 75,000 84,000 22,000 56,000 64,000 93,000 151,000 Sales Cost of Goods Sold Gross Profit Marketing and Promotional Expenses General and Administrative Expenses Repair and Replacement Costs Earnings before Interest, Depreciation, and Amortization Depreciation and Amortization Earnings before Interest and Tax Interest Profit before Tax Tax Net Income 785,000 991,000 1,031,780 773,000 520,000 54,000 731,000 0 731,000 87,720 643,280 54,000 937,000 0 937,000 112,440 824,560 54,000 977,780 0 977,780 117,334 859,846 54,000 719,000 0 719,000 86,280 632,720 54,000 466,000 0 466,000 55,920 410,080 Note: * = INR - Indian rupee; US$1 = 39.94 on April 1, 2008; US$1 = 54.35 on April 1, 2013. Source: Company records. EXHIBIT 2: DETAILS OF FIXED ASSETS FOR HARSH ELECTRICALS Asset Plant and Machinery Workshop Furniture and Fixtures Office Furniture and Fixtures Computer and Software Cost (in **) 320,000 40,000 60,000 80,000 Life (in years) 5 10 10 5 Salvage Value (in) 20,000 NIL NIL NIL Note: * = INR - Indian rupee; US$1 = 54.35 on April 1, 2013. Source: Company records. EXHIBIT 3: HARSH ELECTRICALS RAW MATERIAL COMPONENTS, COST, AND INVENTORY HOLDING PERIODS Raw Material Component Cost for Baleno Model (in 5) Inventory Holding Period (in Days) Credit Period (in Days) Cost for Standard Model (in ) 650 500 90 168 830 630 1 10 10 10 0 14 14 110 205 14 Body Motor Pump Blade, Clamp, and Wiring Pipe, Water Distributor, and Panel Set Diverter Packing (Cartons and Labelling) Wheel (Set) Total 190 110 40 30 1,778 210 110 50 40 2,185 leeeeeee 0 0 10 10 10 0 10 0 Note: * = INR = Indian rupee; US$1 = 54.35 on April 1, 2013. Source: Company records. EXHIBIT 4: HARSH ELECTRICALS MONTHLY ELECTRICITY CONSUMPTION Item Off-Season Consumption (in kWh or Units) 10 units (for Maintenance) Plant and Machinery Peak-Load Consumption (in kWh or Units) 1 unit per Standard model + 1.5 units per Baleno model + 10 units for Maintenance 300 50 100 Factory Lighting Personal Computer Office Lighting 100 20 40 Note: kWh = kilowatt hours Source: Company records