Question 1 A company produces and sells a single product which has the following cost and selling pricesstructure GHS/unit GHS/unit Selling price 120 Direct material 22 Direct labour 36 Variable overheads 14 Fixed overheads 12 84 Profit per unit 36 The fixed overheads absorption rate is based on the normal capacity of 2,000 units per month. Assume that the same amount is spent each month on fixed overheads. Budgeted sales for next month are 2,200 units. Required a. Calculate the breakeven point in sale unit and in value per month b. Calculate the margin of safety for next month c. Calculate the budgeted profit for next month d. Calculate the sales level required to achieve a profit margin of 20% after tax of 30% e. Prepare a profit statement based on the output level determine in (d) above Question 2 Alpha company has produced the following budget. The company produces and sells one product only. GHS GHS Sales 32,000 Direct Materials 11,400 Direct Labour 6,000 Overheads 12,800 30,200 Profits 1,800 Material costs are totally variable but labour and overheads are semi-variable The fixed element of the above labour costs is GHS1,600 and the fixed element of the overhead cost is GHS5,600. The unit selling price is GHS80. In order to develop sales, the company plans next year to reduce the selling price of each unit by 5% this should increase the volume sold by 25%. For next year, fixed costs in total are expected to increase by GHS200. Required a) Present a statement showing contribution per unit and in total b) Calculate the present break-even point c) Calculate the present margin of safety d) Calculate the break-even point if the changes outlined above on unit selling price and quantity are introduced next year. e) Advise on whether or not the price change should be implemented. Question 3 Product X is produced and sold by Y Enterprise. The price per unit of the product has been estimated to be GHS6 per unit with a budgeted fixed cost of GHS82,500 for the period. The Enterprise has planned to sell 240, 000 units of the product with an expected net profit of GHS49,500. Required a. Determine the contribution per unit of the product b. What output must be sold in order to break even c. What extra profit will arise from the sale of a further 37,500 units Question 4 Ababio Plastic Company produces plastic buckets which are distributed all over the country. During the years 2009 and 2010, the following data were extracted: Sales (GHS) Profits (GHS) Year 2009 1,200,000 80, 000 Year 2010 1,400, 000 130, 000 You are required to calculate the following a) Profit-Volume Ratio b) Break-even point in sale value c) Profit when the sales value is GHS1,800,000 d) The sales value required to make a profit of GHS120,000 e) The margin of safety in the year 2010