Answered step by step
Verified Expert Solution
Question
1 Approved Answer
ILLUSTRATION 5 Steve Mayers Ltd. provides you the following figures for the year 2017-18: Direct Material $3,20,000; Direct Wages 8,00,000; Production Overheads (25% Variable) 4,80,000;
ILLUSTRATION 5 Steve Mayers Ltd. provides you the following figures for the year 2017-18: Direct Material $3,20,000; Direct Wages 8,00,000; Production Overheads (25% Variable) 4,80,000; Administration Overheads (75% Fixed) 1,60,000; Selling and Distribution Overheads (2/3rd Fixed) 2,40,000; Sales @125 per unit $25,00,000. For the year 2018-2019, it is estimated that: (1) Output and sales quantity will increase by 20% by incurring additional Advertisement Expenses of $45,200. (2) Material Prices will go up 10%. (3) Wage Rate will go up by 5% along with, increase in overall direct labour efficiency by 12%. (4) Variable overheads will increase by 5%. (5) Fixed production overheads will increase by 33 % %. Required: (a) Calculate the cost of Sales for the year 2017-2018 and 2018-2019. (b) Find out the new selling price for the year 2018- 2019. (i) if the same amount of profit is to be earned as in 2017-2018, (ii) if the same percentage of profit to sales is to be earned as in 2017-2018, (iii) if the existing percentage of profit to sales is to be increased by 25%, (iv) if profit per unit $10 is to be earned
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started