Question A

Kabakaba Company Limited produces chairs which are distributed all over the country. During the years 2012 and 2013, the following data were extracted

Year	Sales	Profit ($)
2012	1,200,000	80,000
2013	1,400,000	130,000

You are required you calculate the following:

1. thatProfit-Volume Ratio (P/V Ratio)
2. Break-Even Point in Sale Value
3. Profit when the sales is $1,800,000
4. The sales Value required to make a profit of $120,000
5. The margin of safety in the year 2013
6. State the uses of the cost-volume-profit (CVP) analysis

Question B

a. First Lead Enterprise is a fruit drink manufacturing enterprise planning to establish its operations in Ghana to produce its trademark Fruitamos. Based on the estimated annual sales of 60,000 bottles of the drink, cost studies have produced the following estimates for the Ghana operation.

	Total Annual Cost	Percentage of total cost which is variable
Material	270,000	100%
Labour	197,000	80%
Factory Overheads	120,000	60%
Administrative Expenses	52,000	35%

All costs are fully resolved into fixed and variable components. No proportion of the cost from other operations are allocated to the Ghana operations. Required:

Compute the selling price per bottle to enable the management to realize an estimated 20% profit on sale procproceedseed in Ghana.

Calculate the break-even point in number of bottles and sales value.

b. Asempa Fii Limited processes fresh milk into butter, cheese, and ghee. It purchases fresh milk and process it until it separates into butter and cheese. For the month of January 2021, Asempa Fii Limited purchased 50,000 litres of milk at GHS 10 per litre. Conversion cost of GHS 100,000 were incurred up to the split split-offoff point where two saleable products were produced processes i.e butter and cheese. Butter can be further processed into Ghee. The January, 2021 production and sales information is as follows

Product	Production (000 litres)	Sales (000 litres)	Selling price per litre (GHS/1)
Cheese	28	28	30
Butter	20	0	0
Ghee	16	16	480

All 20,000 litres of butter are further processes at an incremental cost of GHS 120,000 to yield 16,000 litres of Ghee. There was no opening or closing inventories of butter, cheese or Ghee in January 2021. Required: Show how joint cost would be apportioned between butter and cheese under the estimated net realizable value method.

• KNUST offers to purchase the 20,000 litters of butter in February at GHS 360 per litre. Should Asempa Fii Limited Accept the offer form KNUST?