Question
Managerial Accounting Question 1: The following is the income statement of Giza Co. for the period ended December 31, 2011: Description Product X Product Y
Managerial Accounting
Question 1:
The following is the income statement of Giza Co. for the period ended December 31, 2011:
Description | Product X | Product Y | Product Z | Total |
Sales Revenue
| 60,000 40000 | 90,000 ? | 50,000 34000 |
|
Contribution margin
| ? 0 10,000 | 20,000 8,000 15,000 | ? 20,000 5000 |
|
Net income (loss) | ? | ? | ? |
|
Required:
- Complete the income statement
- Do you advise the company to delete any product? Justify.
- Prepare the income statement in case of deleting a product.
- If the company can increase the sales of all products by 20%, do you still advice the company to delete any product? Justify.
Question 2:
The normal price per unit $120
Total cost per unit $90 (70% variable cost)
A customer from Nigeria would like to import 3000 units to sell in Bahrain for price $70 per unit.
The maximum capacity is 20,000 units
The local demand is 15,000 units.
Do you advise the company to accept this special order? Justify your answer?
If the customer seeks to receive the goods in Bahrain, and the cost of shipping is $8 per unit, do you advise the company to accept the offer in this case? Justify.
Question 3:
A company produces Cars, and purchasing the wheels for $ 100 per unit.
The management thinks to produce the wheels instead of purchasing it.
The cost of producing is as follows:
Variable cost $40
Fixed cost:
New fixed cost to rent new equipment to produce the battery $250,000
General fixed cost (old fixed cost) $100000.
The quantity of wheels 5000
Do you advice the company to produce the wheels or not? Justify?
Question 4:
Cairo Co. can produce 3 products A, B & C; the following data is estimated to help in preparing the production plan for the coming period to maximize the profit:
| A | B | C |
Price | $ 30 | $50 | $30 |
Variable cost | $ 18 | 35 | 20 |
Demand (maximum sales) | 2000 units | 4000 units | 5000 units |
Machine hours per unit | 4 hours | 3 hours | 5 hours |
Machine hours per unit | 3 | 5 | 2 |
The fixed cost for the Co. is $10000 regardless the production plan.
The total machine hours are 30,000 hours (maximum capacity).
Required:
1- Prepare the production plan.
2- Prepare the income statement (Fixed cost is allocated according the sales revenue).
Question 5:
Total cost per unit $150
Compute the price in case of:
- The price equal cost plus 25% of cost
- The price equal cost plus 25% of price
- The price that achieves return on assets 15% (total assets 3000.000 and the quantity of sales 100.000 units)
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