Question No. 5-1

In planning its operations for 2011 on the basis of a sales forecast of 6,000,000 ASF Inc. prepared the following estimated data Costs and Expenses

Variable Fixed

Direct Material 1,600,000

Labor 1,400,000

Factory overhead 600,000900,000

Selling expenses 240,000360,000

Administrative expenses60,000140,000

Required:

a.What would be the amount of sales at the breakeven point?

2,250,000

4,000,000

3,500,000

solve this, individually.

Question No. 5-2

HASF Corporation has fixed costs of 1,000,000 variable costs of 50 per units and a contribution margin ratio of 40% and no of units sold 20,000

Required:

a.Compute the following

Units sales price and unit's contribution margin for the above product

The sales volume in units required for company to earn an operating income of 100,000

The $ sales volume required for company to earn an operating income of 300,000

Question No. 5-3

For each of the three independent situations below computes the missing amounts (1.5 marks)

S/No. Sales Variable costs Contribution margin per unit Fixed costs Operating income Units sold

1 ? 120,000 20 ? 25,000 4,000

2 180,000 ? ? 45,000 30,000 5,000

3 600,000 ? 30 150,000 90,000 ?

Question No. 3

HASF PVT.LTD

BUDGETED INCOME STATEMENT

FOR 1^st QUARTER 1999

Description JANUARY FEBRUARY MARCH

Sales 285,000 323,000 221,000

Purchases 129,000 168,000 95,000

Wages 35,000 37,000 30,000

Supplies 26,000 23,000 21,500

Utilities 6,500 8,700 7,200

Rent 15,000 12,800 13,600

Insurance 12,000 12,000 12,000

Advertising 24,500 28,500 18,000

Depreciation 20,000 20,000 20,000

Net Profit 17,000 13,000 3,700

Required:

a.Please make a cash budget for the months of January, February and March 1999 based on the data for:

View Receivable Trend:

30% of Sales are collected in the month of sale

30% of Sales are collected after the month of sale

40% of Sales are collected two months after the sale is made

View Payable Trend:

10% of Purchases are paid for in the month of purchase

35% of Purchases are paid after the month of purchase

55% of Purchases are paid two months after the purchase is made

Additional Information:

Rent and Insurance expense were prepaid at the end of 1998

All other expenses are paid for in the month they were incurred

November Sales = 195,000

November Purchases = 100,000

December Sales = 250,000

December Purchases = 165,000

Please see attached Budgeted Income Statement for 1st Quarter 1999

b.Being a CFO of the company, interpret the importance budget in strategic and operational planning of the company

HASF Glassworks makes glass flanges for scientific use Material cost Rs.10 per flange and the glass blowers are paid a wage rate of 100 per hours a glass blower blows 20 flanges in two hours. Fixed manufacturing costs for flanges are 25000 per period. other non-manufacturing cost associated with flanges are 10,000 per period and are fixed.

Required:

a.Find out variable cost per units and total fixed cost.

b.Assume Company manufactures and sells 10,000 flanges this period their competitor sells flanges for 15 each. can company sell below competitor price and make a profit on the flanges

c.How would be your answer to requirement 2 differ if company made and sold 20,000 flanges this period why?