Question 1 At the end of March 2016, Carlos Manufacturing Company Ltd was in overdraft at the bank to the extent of $540,000. Cash budgeting is critical to the company's financial information needs. The following information was extracted from the company's records. (1) The table below provides information on budgeted sales for the periods indicated: Budgcted Sales 2016 $ February 2.000.000 March 1.500.000 April 3.000.000 May 2.500.000 June 2.800.000 July 1.900.000 August 2.400.000 September 2.700.000 The company's records indicated that 70% of the company's sales were for cash, and 30% was received two months after sale. (2) Taxation for the first quarter of 2016 amounting to $1,200,000 was due in the first month of the second quarter. (3) In March 2016 the company bought a motor truck for $4,000,000. The agreement with the supplier was that a down-payment of S2,000,000 would be made in the last month of the first quarter in 2016 and the balance paid off in equal amounts during the first two months of the second quarter in 2016, (4) The company is to receive insurance claim of $4,500,000 for damage done to its warehouse during heavy rains. The amount is to be disbursed as follows: $2,000,000 in May 2016: $2,000,000 in June 2016; and the balance in July 2016 (5) Investments held at bank of St. Andrew will mature in June 2016. The amount to be collected is expected to be 3.500,000. The company planned to pay dividends to its shareholders amounting to $1,000,000 in May 2016. It also, planned to pay $1,500,000 in April 2016 for a plot of land to build a new warehouse. (6) In May 2016 the company sold a motor vehicle for $400,000 to one of its staff members while $300,00 written off as bad debt in 2015 was recovered in the first month of the second quarter in 2016. Rental income amounting to $1,800,000 per annum is budgeted for 2016, (1) Operating expenses amounted to $7.200.000 is budgeted for 2016. Included in this figure is monthly depreciation of $100,000 (8) Salesmen are paid commission based on the amounts collected from sales each month. The amount is 5% of sales collection each month, Miscellaneous expenses amounting to $120,000 monthly was not included in the operating expenses budget. (9) Records from the company's books revealed that 60% of purchases are for cash; 20% is paid for one month later, and the balance one month later. The following table provides information on budgeted purchases for the periods indicated: Page 1 of 1 Question 2 You are required to do a monthly cost-volume-profit analysis of the products sold by your organization. One of these products is called "Get-lt-Done" For November 2020, the company budgeted to produce 8.800 units of the product at a selling price of $800 each. The following cost information relating to the product was made available to you: Cost per unit Details s Direct labour Direct materials Variable production overheads 100 360 Fixed production overheads 140 120 160 520 Total Required: (a) Determine the budgeted fixed cost associated with the production of "Get-It-Done" for November 2020. (2 marks) (b) Calculate the break-even point in units and sales revenue (4 marks) (c) Express the break-even point as a percentage of the budgeted sales. (2 marks) (d) Determine the margin of safety and explain the result that you get. (3 marks) (e) Calculate the budgeted profit for November 2020. (3 marks) (1) If the company wanted to make a profit of $3,696.000 what would the new selling price be? (3 marks) (s) Prove your answer to part (1) above. (3 marks) = Page 1 of 1 Question 2 You are required to do a monthly cost-volume-profit analysis of the products sold by your organization. One of these products is called "Get-It-Done". For November 2020, the company budgeted to produce 8,800 units of the product at a selling price of $800 each. The following cost information relating to the product was made available to you: Cost per unit Details S Direct labour 140 Direct materials 120 Variable production overheads 100 360 Fixed production overheads Total 160 520 Required: a) Determine the budgeted fixed cost associated with the production of "Get-It-Done" for November 2020. (2 marks) (b) Calculate the break-even point in units and sales revenue (4 marks) (c) Express the break-even point as a percentage of the budgeted sales. (2 marks) (d) Determine the margin of safety and explain the result that you get. (3 marks) (e) Calculate the budgeted profit for November 2020. (3 marks) (1) If the company wanted to make a profit of $3,696,000 what would the new selling price be? (3 marks) c) Prove your answer to part (1) above. (3 marks) = Page 1 of 1 Question 3 Jahmiel Simpson Ltd produces a single product and has a budgeted capacity of 6,000 units monthly. At the start of May 2019, there were 1,300 units of the product in stock. During the month, the company sold one unit of the product for $1,500. Sales for the month amounted to 9,000 units and there were 700 units of the product in store at the end of the month. Administrative and selling overheads for the month were $600,000 and $800,000 respectively. The following information relating to the product was also extracted from the accounting records: Cost per unit Details S Direct materials 100 Direct labour Variable overheads 120 80 300 100 400 Fixed production overheads Total Required: (a) Determine the amount of production for May 2020. (2 marks) (b) Prepare profit statement using Marginal Costing techniques for May 2020. (5 marks) (c) Prepare profit statement using Absorption Costing techniques for May 2020. (6 marks) (d) Reconcile the profit results obtained using both product costing methods. (3 marks) (e) State two advantages of marginal costing. (2 marks) (1) State two advantages of absorption costing. (2 marks) = Page 1 of 1 Question 4 Brighton Stokes Ltd operates a standard costing system, which provides the company with cost information that is vital to its budget preparation each period. One of the products produced by the company is "Work Right". At the end of September 2016, the following information was extracted from the company's records: Standard cost per unit Direct raw materials 20 litres at $40 each 800 Direct labour 3 hours at $150 each 450 Total 1250 Actual results for the month: Opening stock direct raw materials 20,000 litres Production 5.000 units Direct raw materials purchased was 90.000 litres valued at $3,420,000 Closing stock of direct raw materials 8,000 litres Direct labour 15,200 hours at a cost of $2,219,200. Required: (a) Calculate the direct raw materials price variance. (4 marks) (b) What was the direct raw material usage variance for the month? (4 marks) (c) Determine the difference between the budgeted labour cost and the amount that was actually paid for June 2016. (4 marks) (d) Calculate the direct labour efficiency variance. (4 marks) () Explain the concept of "standard costing" (4 marks) Page 1 of 1 Question 5 At the end of May 2016 there was in stock 1,200 units of Product PZ25 at Jamaica Co Ltd. valued at $200 each. During June 2016, the company sold one unit of the product for $370. The following receipts and sales of the stock item took place during the month: Date Receipts Date Sales June 2016 Quantity Total Cost May 2015 Quantity Sales Price 5 800 $105.000 11 1.400 S420,000 17 1.200 $144.000 21 1.040 S306.800 25 440 S55.000 30 680 S238.000 The accounting records also revealed that the following costs were incurred in the selling of "MP250" during June 2016: carriage outwards, S100,000: salaries, $160,000: electricity $72,000. Required: (a) Jamaica Co. Ltd stores ledger card showing the values of the receipts, issues and closing stock for the month of June 2016 using the FIFO stock valuation method. (12 marks) (b) Prepare a statement of profit or loss made from selling "PZ25" during the month of June 2016 if $20,000 was pre-paid for electricity while $24,000 was owing for salaries at the end of June 2016. (5 marks) (c) Define three (3) types of inventories that have to be valued at the end of an accounting period. (3 marks) END OF QUESTION PAPER Page 1 of 1 =