Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 1 (25 Marks) Oakley Green is a company specializing in making tables and chairs. The latest Income Statement is presented in the table below:

image text in transcribed

Question 1 (25 Marks) Oakley Green is a company specializing in making tables and chairs. The latest Income Statement is presented in the table below: $ 60,000 $17,800 $ 4.800 $ 19,400 $ 42,000 Sales revenue (2,000 units) Manufacturing costs of goods sold: Direct materials and labor (variable) costs Variable manufacturing overhead costs Fixed manufacturing overhead costs Total manufacturing costs of goods sold: Selling and Administrative costs: Variable Selling costs Fixed Administrative costs Total Selling and Administrative costs: Total costs Profit $ 5,500 $6,830 $ 12,330 $ 54,330 $ 5,670 Required: a. Based on last year results, calculate: (5 marks) i) 11) 111) IV) v) revenue. Total variable costs and total fixed costs. Contribution margin ratio, Sales revenue at the break-even point. The margin of safety in a percentage (%) term. The number of units the company will have to sell to earn a profit that equals 20% of the sales b. Explain the assumptions of break-even analysis. (Word limit: 100) (5 marks) c. It is often said that the variable cost associated with a passenger of a low-cost airline carrier such as EasyJet or Ryanair is zero and this allows the airline to offer flights to customers at a very low price or even free. Explain whether you agree with this statement. (Word limit: 300) (10 marks) d. Wardour Street Ltd., a subsidiary of Oakley Green, manufactures and sells woods. Manufacturing overhead is allocated to work in the process using an estimated overhead rate. Beginning and ending work in process were both zero. Transactions for the company during December are shown as follows: Direct materials issued to production Indirect materials issued to production Other manufacturing overhead Overhead allocated Direct labour costs $180,000 $35,000 $245,000 $230,000 $75,000 Is the manufacturing overhead under- or over-applied? By how much

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Sixth International Congress On Accounting 1952

Authors: Various

1st Edition

0367512807, 9780367512804

More Books

Students also viewed these Accounting questions

Question

Describe the three inventory accounts used to record product costs.

Answered: 1 week ago

Question

Define and discuss affirmative action.

Answered: 1 week ago

Question

Discuss diversity management.

Answered: 1 week ago