URGENT ANSWERS NEEDED HELP PLEASE!

Q1-PoMA Ltd uses the Economic Order Quantity Model to determine order quantities. The following information is given for the next year:

Order costs 20 per order

Delivery costs 5 per order

Holding costs 10% of purchase price per annum

Annual demand 22,000 units

Purchase price 40 per unit

No safety stocks are held.

a. What is the EOQ?

b. What are the total annual costs of stock if the company uses EOQ to determine quantity ordered every time (i.e. the total purchase cost plus total ordering cost plus total holding cost)? c. A supplier has offered a 1% reduction in the purchase price if a minimum of 1000 units are ordered per order. Compute the total annual cost if PoMA decided to avail this option. What saving or incremental cost would this result in for PoMA Ltd compared to ordering the EOQ?

Q2

(a) CFR Manufacturing has estimated its economic order quantity for its raw materials at 2,400 units for the coming year. If ordering costs are Rs.200 per order and carrying (holding) costs are Rs.1.5 per unit per year, what is the estimated total annual usage?

(b) [This question is not related to part (a) above]. If EOQ of a company is 1,000 units, holding cost per unit per year is Rs.10. What is total ordering cost?

Q3 -Poma annually consumes 10,000 units of component P. The carrying cost of this component is Rs.2 per unit per year and the ordering costs are Rs.100 per order. PoMA uses an order quantity of 500 units. The company operates 200 days per year, and the lead time for ordering component P is 14 days. What is the re-order point (in terms of units)?

Q4-An extract from the income statement of PoMA Ltd for the previous year is given below:

Rs.

Sales (50,000 units) 1,000,000

Direct materials 350,000

Direct labor cost (50,000 hours) 200,000

Fixed manufacturing overhead 180,000

Variable manufacturing overhead 50,000

Administration overheads 180,000

Selling and distribution overhead 120,000

The directors are keen to improve revenue and productivity and are considering various options. You are the management accountant and are requested to compute the following:

a. If salesmen are paid commission of 10% of sales, how many units must be sold to achieve breakeven point. (2 Marks)

b. By how much does profit change (increase or decrease) if the selling price is reduced by 10% resulting in an estimated increase in sales volume (in number of units) by 30%.

c. By how much does profit change (increase or decrease) if the direct labor rate is increased from Rs.4 to Rs.5 per hour. This increase is expected to increase production and sales by 20% without affecting the hours worked. However, advertising costs will increase by Rs.50,000.

d. How many units must be sold in order to achieve a target profit margin of 10% on sales (profit/salesx100) assuming that advertising costs will increase by Rs.300,000 and selling price will increase by 20%

e. What is the Margin of Safety at the sales volume derived in part d above (express as percentage of sales)

Q5- RT plc sells three products

Product R has a contribution to sales ratio of 30%.

Product S has a contribution to sales ratio of 20%.

Product T has contribution to sales ratio of 25%.

Monthly fixed costs are Rs.5,000,000.

If the products are sold in the ratio:

R: 2 S:5 T:3

A) What is the monthly break-even sales revenue to the nearest Rupee?