Question
Q1. E.F. is the sole owner of Lockdown Wholesale Traders, a company which buys fruit from farmers and sells it to supermarkets. All goods are
Q1. E.F. is the sole owner of Lockdown Wholesale Traders, a company which buys fruit from farmers and sells it to supermarkets. All goods are collected from farms and delivered to supermarkets on the same day, so no inventories (stocks) of fruit are held. The accounting records of Lockdown Wholesale Traders at 30 June Year 2, relating to the year then ended, have been summarized by E. F. as follows:
Fleet of delivery vehicles, after deducting depreciation Br. 35,880
Furniture and fittings, after deducting depreciation 18,800
Trade receivables 34,000 Cash in Bank 19,000
Accounts payables 8,300
Sales 294,500
Cost of goods sold 188,520
Wages and salaries Expense 46,000
Advertising Expense 14,200
Administration Expense 1,300
Depreciation of vehicles, furniture and fittings 2,400
Required
a) Identify each item in the accounting records as either an asset, a liability, or ownership interest or Equity (identifying separately the expenses and revenues which contribute to the change in the ownership interest).
b) Prepare an income statement (profit and loss statement) for the year ended 30 June Year 2. Q2. Grand Plc. manufactures and sells pens. Present sales output is 5 million annually at a selling price of Br.5.00 per unit. Fixed costs are Br.900 000 per year. Variable costs are Br.3.00 per unit.
Required
(Consider each case separately.)
i.
a. What is the present operating profit for a year?
b. What is the present breakeven point in revenues?
Calculate the new operating profit for each of the following changes:
ii. A Br.0.04 per unit increase in variable costs.
iii. A 10% increase in fixed costs and a 10% increase in units sold.
iv. A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable costs per unit, and a 40% increase in units sold.
Calculate the new breakeven point in units for each of the following changes:
v. A 10% increase in fixed costs.
vi. A 10% increase in selling price and a Br.20 000 increase in fixed costs.
Q3. Hamburgers and Moore, Inc., sells hamburgers, drinks, and fries. The sales mix is 1:3:2 (i.e., for every one hamburger sold, three drinks and two fries are sold). Using the contribution margin approach, find the breakeven point in units for each product. The company's fixed costs are Br.2,040. Other information is as follows:
Selling Price per Unit Variable Costs per Unit
Hamburgers Br.0.99 Br.0.27
Drinks 0.99 0.09
Fries 0.99 0.1
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