Question 1:

Define break-even analysis and contribution in total and per unit

Explain the concepts of budgeting and budget control, and why budgets are important for companies

Explain the need for and the importance of financial ratios

Question 2:

Mirbat Company has the following information:

Selling price per unit	50
Variable cost per unit	30
Total fixed cost	20,000
Target profit	8,500

Calculate the following by using the information given

i. Contribution per unit

ii. PV ratio

iii. BE Sales and BE units

iv. Sales to achieve target profit

v. New break-even point if selling price per unit is increased to 65

vi. New break-even point if variable cost per unit is decreased to 25

vii. New break-even point if fixed cost is decreased to 18,000

viii. Margin of safety in case the company has Sales of 100,000

Question 3:

Prepare the following budgets based on the information given.

i. Sales Budget

Maxifilo Company has three branches in Oman; Muscat, Salalah, and Sohar and it sells three products. The estimations for 2023 are given in the table below.

	Product A	Product B	Product C
Selling price per unit	15	25	38
Units to be sold	1000	2000	3000
Estimated return %	5	10	3

Table below shows the breakdown of Units to be sold per branch.

Branch	Product A	Product B	Product C
Muscat	500	800	1400
Salalah	300	800	900
Sohar	200	400	700

ii. Cash Budget

The table below shows the necessary information for cash budget.

Month/Year	Sales	Purchases	Salaries&Wages	Operating Expenses
October 2022	80,000	60,000	25,000	50,000
November 2022	100,000	70,000	25,000	55,000
December 2022	120,000	90,000	25,000	45,000
January 2023	150,000	120,000	30,000	48,000
February 2023	180,000	130,000	32,000	57,000
March 2023	200,000	140,000	32,000	61,000
April 2023	225,000	100,000	32,000	65,000

Based on the information and assumptions below, prepare a cash budget for the first four months of 2023.

i. Cash balance as of 1 January 2023 is 50,000 OMR.

ii. 40 % of Sales are on cash basis, and the credit period for the remaining is 2 months.

iii. The company makes 20 % immediate cash payment for purchases, the balances are paid after 3 months.

iv. Salaries&wages are paid in the next month.

v. Operating expenses are paid after 2 months.

vi. The company must pay income tax at the end of March, the amount is 15,000 OMR.