Part - Question No: 4 Numerical Problems: Note: Answer any three of the following problems: (SLO 2, 4, 5&6) (36 Marks) Problem 1: The following information has been taken from the accounting records of Ahmed and Company in first and second period. Period 2019 2020 Sales $ 100,000 150,000 Profit $15,000 25,000 Calculate: 1) Profit volume ratio 2) Fixed cost for two periods 3) Variable cost oftwo periods. 4) Break Even Point in dollars sales 5) Sales required to earn a profit of $25,000 6) Profit when sales are $200,000 Problem 2: The following information at 50% capacity is given. Prepare a flexible budget and forecast the profit or loss at 60%, 80% and 90% capacity. Particulars Expenses at 50% Capacity Fixed Expenses: Amount Salaries $ 500,000 Rent and Taxes 400,000 Depreciation 600,000 Administrative Expenses 700.000 Variable Expenses: Materials $200.000 Labor 250,000 Others variable expenses 400,000 Semi-Variable Expenses: Indirect Labor $150.000 Others semi variable expenses 90.000 Continuation to next page 5 It is estimated that fixed expenses will remain constant at all capacities. Semi variable expenses will not change between 50% and 60% capacity, will rise by 10%between 60% and 80% capacity, a further increase of 5% when capacity crosses 80%. Estimated sales at various levels of capacity are: Capacity 50% 60% 80% 90% S Sales $1,500,000 2,000,000 2,500,000 3,000,000 Problem 3 The company will invest $150,000 in a project and average annual income $50,000. The investment will provide the following inflows: Year 1 2 3 4 5 Cash inflow $ 25,000 45,000 30,000 50,000 70,000 Calculate: 1. Net present value at 10% discount factor. 2. Payback period 3. Accounting rate ofreturn 4. Internal Rate of Return at 10% and 15% discount factor. Problem 4: The following information has been taken from the accounting records of Manufacturing company for year December, 2019: Particulars Raw materials inventory, January 1 Raw materials inventory, December 31 Selling expenses Utilities, factory Direct labor cost Depreciation factory Purchase of raw materials Sales Insurance, factory Supplies, factory Administrative expenses Indirect labor Maintenance, factory Work in progress inventory, January 1 Work in progress inventory, December 31 Finished goods inventory, January 1 Finished goods inventory, December 31 Amount $500,000 50,000 50,000 50,000 100,000 120,000 2,500,000 5,000,000 50,000 20,000 150,000 200,000 100,000 150,000 100,000 250,000 150,000 Management wants these date organized in a better format so that financial statements can be prepared for the year. Required: 1. Prepare a schedule of cost of goods manufactured. 2. Prepare the cost of goods sold 3. Prepare a pro forma income statement for December, 2019. Problem 5 Prepare a cash budget for the months of March, April and May 2020 on the basis of the following information. Income and Expenditure forecasts: Months Credit Credit Wages Manu - Office Selling Sales Purchases facturing. Expenses Expenses Expenses January $25,000 $5,000 $3,000 $2,000 $1,000 $2,000 February 15,000 4,000 5,000 3,000 1,000 3,000 March 20,000 5,000 2,000 2,000 2,000 4,000 April 15,000 6,000 4,000 3,000 2,000 3,000 May 25,000 7,000 2,000 2,000 1,000 4,000 June 30,000 3,000 6,000 3,000 1,000 3,000 Other Information is as follows: 1. Cash balance on 1st March, 2020 $150,000 2. Plant costing $ 10,000 is due for delivery in May, payable 10% on delivery and the balance after 3 months. 3. Advance tax of $5,000 each is payable in April and May 4. Period of credit allowed (1) by suppliers two months and (ii) to customers one month. 5. Lag in paymentofmanufacturing expenses one month 6. Lag in payment of office and selling expenses one month 7. Wages are paying in same month