Question 1: 6 marks) (a) Explain what is meant by trend analysis. (3 marks) Answer: Trend analysis is a technique for evaluating a series of data over a period of time to determine the increase or decrease that has taken place, expressed as either an amount or a percentage. (b) Comparative information taken from the ADIB Bank financial statements is shown below: (3 marks) | 2019 2018 (a) Accounts receivable $ 20,000 $ -O- (b) Inventory 182,000 140,000 Net Income 30,000 (40,000) Account payable 44,000 20,000 Service Revenue 960,000 750,000 (f) Administrative and Marketing expenses 170,000 200,000 Instructions Using horizontal analysis, show the percentage change from 2018 to 2019 with 2018 as the base year. Answer: Question 2: (10 marks) The following data have been provided by a company for a recent account period: $10,000 $2,000 $34,000 SER Inventories, beginning: Raw materials.... Work-in-process... Finished goods. Inventories, ending: Raw materials... Work-in-process... Finished goods Purchases of raw materials.. Direct labor wages Sales commissions Manufacturing overhead Marketing costs.. Administrative expenses Sales ..... $11,000 $4,000 $30,000 $50.000 $40.000 $3.000 $60,000 $55,000 $70,000 $300,000 Required: Calculate the cost of goods manufactured for the period. Answer: Question 3: (5 marks) Selected information from the comparative financial statements of Dubai Company for the year ended December 31, appears below: 2018 2017 Accounts receivable (net) $ 90,000 $100,000 Inventory 70,000 80,000 Total assets 600,000 400,000 Current liabilities 70,000 55,000 Long-term debt 200,000 150,000 Net credit sales 855,000 350,000 Cost of goods sold 525,000 265,000 Interest expense 25,000 12,500 Income tax expense 30,000 14,500 Net income 60,000 42,500 Instructions: Answer the following questions relating to the year ended December 31, 2018 1. Inventory turnover for 2018 is 2. Times interest earned in 2018 is 3. The debt to total assets ratio for 2018 is 4. Receivables turnover for 2018 is 5. Return on assets for 2018 is Question 4: Explain what is meant by Cost-Volume-Profit analysis and why is it important? (3 + 6 marks = 9 marks) Answer: Question 5: (10 marks) Abu Dhabi manufacturer has supplied the following data: Boxes of tiles produced and sold Sales revenue. Variable manufacturing expense. Fixed manufacturing expense Variable selling and administrative expense... Fixed selling and administrative expense Net operating income.. 520,000 $2.132,000 $630,000 $464.000 $260.000 $312.000 $446,000 (a) What is the company's unit contribution margin? Show the workings (3 marks) Answer: Question 5: (10 marks) Abu Dhabi manufacturer has supplied the following data: Boxes of tiles produced and sold Sales revenue...... Variable manufacturing expense. Fixed manufacturing expense .. Variable selling and administrative expense. Fixed selling and administrative expense Net operating income. 520,000 $2,132,000 $650,000 $464,000 $260,000 $312.000 $446,000 (a) What is the company's unit contribution margin? Show the workings (3 marks) Answer: (b) Calculate The company's contribution margin ratio: (3 marks) Answer: Question 5: (10 marks) Abu Dhabi manufacturer has supplied the following data: Boxes of tiles produced and sold Sales revenue.... Variable manufacturing expense. Fixed manufacturing expense. Variable selling and administrative expense. Fixed selling and administrative expense Net operating income 520,000 $2,132,000 $650,000 $464,000 $260,000 $312,000 $446,000 (a) What is the company's unit contribution margin? Show the workings (3 marks) Answer: (b) Calculate the company's contribution margin ratio: (3 marks) Answer: (C) If the company increases its unit sales volume by 3% without increasing its fixed expenses, then total net operating income should be closest to: show workings (4 marks)
