Question Tag: Profit Calculation

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 25 Marks

QMDM – JULY 2020 – L2 – Q6 – Breakeven Analysis for Office Chairs

Define revenue, cost, profit functions; calculate breakeven, revenue/income at breakeven, profit at 1,500 units, and units for GHe75,000 profit

Agorwu Company produces office chairs. The price per chair is GHe99.75 and the variable cost per chair is GHe49.75. The following fixed costs are incurred:

Depreciation of plant and equipment per year GHe20,000
Property taxes per year GHe12,000
Manager’s salary and fringe benefits per month GHe5,200

Perform a breakeven analysis of this company:

a. What is the total revenue function? (2 marks)

b. What is the total cost function? (2 marks)

c. What is the profit function? (2 marks)

d. What is the breakeven point in number of chairs? (2 marks)

e. What is the revenue at the breakeven point? (2 marks)

f. What is the income at the breakeven point? (2 marks)

g. Determine the profit when 1,500 chairs are produced in a year. (8 marks)

h. How many chairs must be sold for the company to make GHe75,000 in a year? (5 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "QMDM – JULY 2020 – L2 – Q6 – Breakeven Analysis for Office Chairs"

  • 20 Marks

IA – JULY 2020 – L1 – Q7 – Break-Even Analysis and Overhead Allocation

Calculate break-even units and sales revenue; translate percentages to absolute figures and calculate profit after tax; allocate overheads.

The following estimates have been drawn up by AIRTROTRO LIMITED that manufactures three products:

Engine GHS’000 Propeller GHS’000 Cabin GHS’000
Cost per unit:
Materials 70 84 66
Labour 50 36 10
Packing 10 10 84,000
Fixed Costs per year 120,000 70,000 150
Selling Price per unit 170 150 190

You are required to determine:

  1. The units of each product that must be manufactured and sold by the factory to break-even.
  2. The total sales revenue of AIRTROTRO LIMITED at break-even point.

b. The accountant of EXCAVATOR ASSEMBLY PLANT determined the following allocation percentages for the various departments – Manufacturing, Selling, and Administration. The Company’s annual sales turnover is GHS 50,000,000.

Expenditure Item Expenditure GHS % Allocation of Expenditure
Manufacturing (%) Selling (%) Administration (%)
Raw Materials 25,000,000 93 10 3
Labour 12,500,000 87.5 9.5 20
Insurance 750,000 35 45 5.5
Taxes 1,250,000 29.5 65 11
Depreciation 7,500,000 77 12

You are required to:

  1. Translate the percentages (%) into absolute figures (GHS) using the expenditure item as the base.
  2. Calculate the profit after tax of EXCAVATOR ASSEMBLY PLANT.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "IA – JULY 2020 – L1 – Q7 – Break-Even Analysis and Overhead Allocation"

  • 20 Marks

EIB – OCT 2022 – L1 – Q3 – Price Mechanism, Elasticity, and Costs

Advantages of price mechanism, supply elasticity factors, costs, and profit computation.

(a) Mention two advantages of price mechanism. (4 marks

(b) Mention two factors that determine price elasticity of supply. (4 marks

(c) What are the firm’s explicit costs? (4 marks

(d) The fixed cost and the variable cost of production are collectively termed what? (4 marks

(e) A competitive firm’s price is GHC10, ATC is GHC 5, quantity supplied is 20, calculate its profit level. (4 marks

(Total marks:20)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "EIB – OCT 2022 – L1 – Q3 – Price Mechanism, Elasticity, and Costs"

  • 20 Marks

EIB – APR 2024 – L1 – Q3 – Market Structures and Price Controls

Defines perfect competition, lists features, calculates profit and shutdown, defines oligopoly, explains price ceiling effects.

(a) What is a Perfect Competitive Market in Economics? [2 marks]

(b) Identify three (3) features of Perfect Competition. [6 marks]

(c) Assuming a competitive firm’s Price (P) is GHC12, Average Total Cost (ATC) is GHC13, Average Variable Cost (AVC) is GHC10, and Quantity Supplied (QS) is 25. Calculate the firm’s Profit level and explain why it should or should not shut down in the short run. [6 marks]

(d) Explain the term Oligopoly as a Market Structure. [2 marks]

(e) What is Price Ceiling? Mention two (2) effects of Price Ceiling? [4 marks]

(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "EIB – APR 2024 – L1 – Q3 – Market Structures and Price Controls"

  • 20 Marks

MA – Mar 2025 – L2 – Q5 – Decision making techniques

Determine whether Moree Engineers LTD should make or buy extra seating assemblies for scooters, considering costs and opportunity costs.

a) i)
Moree Engineers LTD (MEL) makes electrically-driven disability scooters aimed at elderly and/or disabled customers. At present, wheels and tyres are bought from external suppliers but all other parts are manufactured in-house. The scooters have a strong reputation due mainly to innovative designs, special power units that can be recharged at home and seats that enable easy access for a wide range of disabilities. MEL also sells power units to other firms.
Current monthly costs are as follows:

Seating Department Power Unit Department
Costs GH¢ GH¢
Direct Materials 9,300 4,140
Direct Labour 12,600 9,450
Apportioned overheads 26,700 17,200
48,600 30,790
Production level 60 units 90 units

The power unit department currently produces 90 units a month, 60 units are used in MEL’s own scooters while 30 units are sold externally at GH¢376 each.
A contract has been won to supply an additional 10 scooters per month. However, the directors are considering how best to meet the additional demand.
Sufficient capacity exists for the company to increase its monthly production to 70 scooters, except that making an extra 10 seating assemblies would require reallocation of labour and other resources from the power unit to the seating department. This would cut power unit output by 20 units per month.
The alternative course would be to buy 10 seating assemblies from an outside supplier and fit the 10 power units from the present production of 90 units. The cheapest quote for seating assemblies is GH¢610 per assembly.

Required:
Based on the figures given, show whether Moree Engineers LTD should make or buy the extra seats.

a) ii) Discuss FOUR other factors that should be considered before a final decision is taken to make or to buy the extra seats.

b) i). Bambo LTD produces three medical products namely, gloves, bandages and syringes. The budgeted sales in the coming year for the three products is GH¢4,530,000. The company accordingly projected GH¢750,000 post-tax profit on the three products for the period.
Detailed budgeted Cost and sales data for the coming year are as follows:

Gloves Bandages Syringes
Sales Volume (%) 40% 25% 35%
Variable cost to Sales ratio 60% 67.5% 54.5%

The fixed cost for Bambo LTD amounted to GH¢1,330,000.
Other information:
Corporate tax rate is 25%

Required:
Calculate margin of safety in percentage (%) terms.

b) ii) Calculate post-tax revenue to achieve the projected profit.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "MA – Mar 2025 – L2 – Q5 – Decision making techniques"

  • 20 Marks

PM – May 2023 – L2 – SA – Q2 – Decision-Making Techniques

Construct payoff tables, determine profitable print numbers, and discuss decision rules for football program sales.

The local football club has asked for your advice on the number of programmes that should be printed for each game. The cost of printing and production of programmes for each game, as quoted by the local printer, is ₦1,000,000 plus ₦400 per copy. Advertising revenue which has been agreed for the season represents ₦800,000 for each game.

Programmes are sold for ₦150 each. A review of sales during the previous seasons indicates that the following pattern is expected to be repeated during the coming season of 50 games:

Number of programmes sold Number of games
10,000 5
20,000 20
30,000 15
40,000 10

Programmes not sold at the game are sold as waste paper to a paper manufacturer at ₦100 per copy.

Assuming that the four quantities listed are the only possibilities, you are required to:

a. Prepare a payoff table. (6 Marks)

b. Determine the number of programmes that would provide the highest profit if a constant number of programmes were to be printed for each game. (4 Marks)

c. Explain why you should buy 30,000 or 40,000 copies, assuming one of these is the most profitable quantity, despite the fact that the most probable sales are 20,000 copies per game. (2 Marks)

d. Calculate the profit which would arise from a perfect forecast of the numbers of programmes which would be sold at each game. (4 Marks)

e. Discuss the major limitations of the expected value criterion in decision making. (4 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PM – May 2023 – L2 – SA – Q2 – Decision-Making Techniques"

  • 15 Marks

FA – May 2012 – L1 – SB – Q6 – Financial Statements Preparation

Prepare Statements of Affairs for two years and calculate opening capital, net worth, and profit.

Fortward Geso Trading Store maintained a single-entry system. The following information was extracted from the records:

Year Ended 31 December 2011 31 December 2010
Accrued expenses 10,000 —
Accounts receivable 196,000 130,000
Prepaid expenses — 16,000
Bank balances (40,000) 200,000
Investment 500,000 —
Cash balance 366,000 106,000
Accounts payable 74,000 90,000
Land and buildings 1,500,000 1,500,000
Delivery van 260,000 260,000
Inventories 190,000 74,000
Loan from bank 300,000 300,000

The following additional information was also made available in respect of the 2011 accounting year:
(i) Provision for doubtful debts should be made for N3,000.
(ii) Depreciation is to be provided on book value as follows:
(a) Land and buildings 5%
(b) Delivery van 10%
(iii) Additional capital of N250,000 was introduced into the business during the year.
(iv) The owner of the store withdrew a total sum of N20,000 during the year.

You are required to:
Prepare the Statements of Affairs of Fortward Geso Trading Stores for the two years to show:
(a) The opening capital (6 Marks)
(b) Net worth of the business (6 Marks)
(c) Profit (3 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2012 – L1 – SB – Q6 – Financial Statements Preparation"

  • 10 Marks

QTB – May 2016 – L1 – SB – Q1a – Mathematics

Calculate profit in year 5 for new product with given growth rates for units produced, selling price, and production costs.

A company plans to introduce a new product into the market. 6,000 units are to be produced in the first year with an annual growth rate of 3.5%. Selling price is to be set at N1,050 per year with an annual growth rate of 6.5%.

Required:

If the production costs are to be pegged at N850 in the first year with an annual growth rate of 5%, calculate the profit earned in year 5.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "QTB – May 2016 – L1 – SB – Q1a – Mathematics"

  • 15 Marks

PM – May 2018 – L2 – Q5 – Strategic Management Accounting

Determine the optimal production plan for Classic Wears Plc. and calculate the total profit.

Classic Wears Plc. manufactures three unique jeans wears for which the maximum
revenue for the coming year is estimated as follows:

 

summarised unit cost data are as follows:

 

 

The products are processed on sewing machines housed in a building of three blocks.
Block A contains type I machine which has an estimated maximum of 19,600 machine
hours available in the forthcoming year with fixed overhead cost of N980,000 per
annum.
Block B contains type II machine of which 10,000 machine hours are estimated in the
forthcoming year with a fixed overhead cost of N750,000 per annum.
Block C also contains type II machine which also has an estimate of 8,000 machine
hours available in the forthcoming year. The fixed overhead cost of N370,000 is
estimated per annum for Block C.
The required machine hours for one unit of output for each Jeans on each type of
machine are as follows:

 

 

You are required to:
a. Determine the optimal production plan which Classic Wears Limited should
adopt. (12 Marks)
b. Calculate the total profit that would be made, if the production plan in (a)
above is adopted. (3 Marks)

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PM – May 2018 – L2 – Q5 – Strategic Management Accounting"

  • 15 Marks

PM – May 2019 – L2 – Q5 – Transfer Pricing

Profitability analysis for two divisions, including transfer pricing and external supplier impacts.

TK is a company that produces toy television sets targeting children of the elite. The company has two divisions, Division S and Division B. Division S manufactures components for the televisions and sells components to Division B and to external customers. Division B uses five of the components in each of the toy television sets that it manufactures and sells television sets directly to external customers.

Division S
Budgeted variable manufacturing cost per component (N):

  • Direct material: 140
  • Direct labour: 180
  • Variable overhead: 120

Additional Information:

  • Fixed costs: N5,600,000
  • Production capacity: 175,000 components
  • External demand: 150,000 components
  • Potential demand from Division B: 80,000 components
  • Anticipated external market price for a component: N500

Division B

  • Sales price: N4,500
  • Budgeted variable manufacturing cost per television (N):
    • Direct material: 400
    • Direct labour: 620
    • Variable overhead: 160

Each toy television set produced needs five components. Fixed costs are budgeted to be N14,600,000 for next year. Annual sales of the toy television sets are expected to be 16,000 units.

Transfer Pricing Policy:

  • Transfer prices are set at opportunity cost.
  • Division S must satisfy the demand of Division B before selling components externally.
  • Division B is allowed to purchase components from Division S or from external suppliers.

Required:
a. Assuming that Division B buys all the components it requires from Division S:
Prepare a profit statement for each division detailing sales and costs, showing external sales and internal company transfers separately where appropriate. (6 Marks)

b. A specialist external supplier has approached Division B and offered to supply 80,000 components at a price of N420 each. The components fulfil the same function as those manufactured by Division S. The manager of Division B has accepted the offer and agreed to buy all the components it requires from this supplier:
i. Produce a revised profit statement for each division and for the total TK company.
ii. Division S has just received an enquiry from a new customer for the production of 25,000 components. The manager of Division S requires a total profit for the year for the division of N4,500,000.

  • Calculate the minimum price per component to sell the 25,000 components to the new customer that would enable the manager of Division S to meet the profit target. (4 Marks)

Note: This order will have no effect on the divisional fixed costs and no impact on the 150,000 components Division S sells to its existing external customers at N500 per component. Division B will continue to purchase the 80,000 components it requires from the specialist external supplier.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PM – May 2019 – L2 – Q5 – Transfer Pricing"

  • 20 Marks

MI – Mar-Jul 2020 – L1 – SB – Q1 – Costing Methods

Prepare a contract account, statement of financial position, and calculate the expected profit on a construction project.

Piano Construction Company Limited has been in operation for many years. The following relates to Contract AO50 on the Akure-Owo site as at 31st Dec., 2017.

Item Amount (N’000)
Wages 42,156
Materials delivered directly to site 54,203
Materials from main stores 657
Materials transferred to Akure-Ibadan Site 1,590
Plant purchased at cost 12,500
Plant transferred to Akure-Owo Site 5,250
Sub-contractor’s charges 19,580
Site expenses 5,086
Materials on site at 31st Dec. 18,300
Plant on site at 31st Dec. 14,750
Accrued wages at 31st Dec. 921
Prepayments at 31st Dec. 507
Value of work certified 117,500
Cost of work certified 102,300
Progress payments received from client 115,000

Head office charges are 10% of wages.

The contract value is N550,000,000 and it is anticipated that there will be further costs of N375,000,000 (including rectification claims). As this is the 1st year of the contract, no profit has been taken previously.

Required:

  1. Prepare the Contract Account for project AO50 for the year ended 31st December, 2017. (15 Marks)
  2. Prepare the Statement of financial position extracts as at 31st December, 2017. (3 Marks)
  3. What is the expected profit on the contract on completion? (2 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "MI – Mar-Jul 2020 – L1 – SB – Q1 – Costing Methods"

  • 1 Marks

MI – May 2016 – L1 – SA – Q6 – Costing Techniques

Calculate the net profit using marginal costing based on given absorption costing profit and inventory data.

The net profit was N2,650,000 using absorption costing and the closing inventory was 14,600 units. Production overhead absorption rate was N18.50 per unit. If the Non-production absorption rate was N14.00 per unit, then the net profit using marginal costing is:
A. N2,379,900
B. N2,445,600
C. N2,650,000
D. N2,854,400
E. N2,920,100

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "MI – May 2016 – L1 – SA – Q6 – Costing Techniques"

  • 1 Marks

MI – May 2016 – L1 – SA – Q4 – Cost-Volume-Profit (CVP) Analysis

Identify the conditions under which total contributions equal units sold multiplied by contribution per unit.

The formula which states that total contributions equal units of sales multiplied by contribution per unit is correct if the selling price:

A. And fixed cost are constant
B. And variable cost are constant
C. Varies and variable cost is constant
D. Varies and fixed cost is constant
E. And variable cost vary

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "MI – May 2016 – L1 – SA – Q4 – Cost-Volume-Profit (CVP) Analysis"

  • 1 Marks

MI – May 2024 – L1 – SA – Q9 – Costing Techniques

Calculates profit on one product in a joint-cost situation with normal process loss.

RSTU manufactures two products called S and T with a joint cost of N3,550,000. Normal process loss is 5% of expected output with scrap value of N50,000 and joint costs are apportioned based on sales value. Other data available are as follows:
Product S: 11,520 units, selling price N250
Product T: 9,750 units, selling price N320

The profit on product T is:
A. N1,515,628
B. N1,492,708
C. N1,416,000
D. N1,300,000
E. N1,274,000

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "MI – May 2024 – L1 – SA – Q9 – Costing Techniques"

  • 1 Marks

FA – May 2024 – L1 – SA – Q12 – Financial Statements Preparation

Calculates profit based on changes in assets, liabilities, and additional capital.

Given the following information:

  • Total assets at December 31, Year 2: ₦150,400
  • Total assets at December 31, Year 1: ₦125,000
  • Total liabilities at December 31, Year 2: ₦43,200
  • Total liabilities at December 31, Year 1: ₦34,800
  • Additional capital input on December 31, Year 2: ₦10,000

What was the profit of the business for the year ended December 31, Year 2?

A. ₦7,000
B. ₦17,000
C. ₦27,000
D. ₦90,200
E. ₦107,200

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2024 – L1 – SA – Q12 – Financial Statements Preparation"

  • 1 Marks

FA – May 2024 – L1 – SA – Q2 – Recording Financial Transactions

Calculates profit based on opening and closing capital with drawings.

A business proprietor failed to maintain proper records, but you managed to ascertain that his opening capital, closing capital, and drawings during the year were N225,000, N260,000, and N10,000 respectively. Determine the profit for the period.

A. N25,000
B. N45,000
C. N55,000
D. N65,000
E. N75,000

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – May 2024 – L1 – SA – Q2 – Recording Financial Transactions"

  • 14 Marks

FR – Nov 2015 – L2 – Q4b and c- Financial Reporting Standards and Their Applications

This question involves recalculating profit and financial position based on a change in the method for determining contract completion and explaining the difference between accounting estimates and policies.

LB Ltd is a construction contract company involved in building commercial properties. Its current policy for determining the percentage of completion of its contracts is based on the proportion of cost incurred to date compared to the total expected cost of the contract.

One of LB Ltd’s contracts has an agreed price of GHS 500 million and estimated total costs of GHS 400 million. The cumulative progress of this contract is:

Year ended 30 September 2011 30 September 2012
Costs incurred 160 290
Work certified and billed 150 320
Billing received 140 300

Based on the above, LB Ltd prepared and published its financial statements for the year ended 30 September 2011. Relevant extracts are:

STATEMENT OF PROFIT OR LOSS

Description GHSm
Revenue 200
Cost of sales (160)
Profit ((100 x 160/400)) 40

STATEMENT OF FINANCIAL POSITION

Description GHSm
Current assets: Amounts due from customers
Contract costs to date 160
Profit recognised 40
Total assets 200
Progress billings (150)
Net assets 50
Contract receivables (150-140) 10

LB Ltd has received some adverse publicity in the financial press for taking its profit too early in the contract process, leading to disappointing profits in the later stages of contracts. Most of LB Ltd’s competitors take profit based on the percentage of completion as determined by the work certified compared to the contract price.

Required:

(i) Assuming LB Ltd changes its method of determining the percentage of completion of contracts to that used by its competitors, and that this would represent a change in an accounting estimate, calculate equivalent extracts of profit or loss and statement of financial position for the year ended 30 September 2012. (7 marks)

(ii) Explain why the above represents a change in accounting estimate rather than a change in accounting policy. (2 marks)

c)

LB Ltd also sells building materials to other contractors from its warehouse and is considering setting up another retail branch in a different part of the country.

The directors have been told that the branch can be run directly through the head office or set up as a separate entity, but are not sure how the accounting will work.

Required:
Explain to the directors how this transaction should be treated in the books of LB Ltd.
(5 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2015 – L2 – Q4b and c- Financial Reporting Standards and Their Applications"

  • 15 Marks

MA – May 2019 – L2 – Q4 – Cost-volume-profit (CVP) analysis

Evaluate different options to improve profitability and perform CVP analysis including break-even and margin of safety calculations.

Boasiako Ltd manufactures high-quality coffee biscuits that are sold to hotels and restaurants in Koforidua. Two months ago, it had prepared a budget for the forthcoming financial year.

Details of the budget are presented below:
Sales GH¢6,000,000
Less:
Direct materials GH¢2,080,000
Direct labour GH¢1,160,000
Variable overheads GH¢840,000
Fixed overheads GH¢972,600
Total costs GH¢5,052,600
Profit GH¢947,400

The budget above has been prepared on the assumption that sales will be 800,000 packets of biscuits. However, due to changing economic conditions, the sales forecast for the year is now 720,000 packets of biscuits. It is expected that the selling price per unit, direct costs per unit, and variable overhead cost per unit will not change from those budgeted. It is also expected that fixed overheads will be the same as those budgeted.

Management is now considering a number of options to improve profitability for the forthcoming financial year:

Option 1:
Decrease the selling price by 20%. It is anticipated that this would increase sales volume by 25% on the forecast sales for the current year.

Option 2:
Decrease all variable costs by 10% and decrease fixed costs by 10%. This is not expected to have any impact on the sales level.

Option 3:
Decrease the selling price by 10% and decrease fixed costs by 5%. This is expected to increase sales volume by 25% on the forecast sales for the current year.

Required:
a) Calculate the expected profit for the current year (forecast sales). (2 marks)
b) Based on the forecast activity for the year, calculate:
i) The breakeven point in packets of biscuits.
ii) The margin of safety in percentage terms.
iii) The sales revenue required to earn a profit of GH¢1,440,000. (6 marks)
c) Evaluate the profitability of the three options and recommend the option that Boasiako Ltd should adopt. (7 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "MA – May 2019 – L2 – Q4 – Cost-volume-profit (CVP) analysis"

  • 5 Marks

FM – NOV 2015 – L2 – Q5b – Foreign exchange risk and currency risk management

Calculate the profit or loss on a foreign exchange transaction involving the import of musical instruments by Skytrain.

b. Skytrain, a music production company, imported musical instruments from Sweden for Krona 2,100,000 at a rate of Krona 7.00 to GH₵1.00. Skytrain sold the goods for GH₵600,000 after paying shipping cost of GH₵50,000 and bank transfer charges of GH₵5,000 and Krona 10,000. At the time of paying the bank charges, the Krona was traded at 5 to GH₵1.00.

 

Required:
Calculate the profit or loss on this transaction. (5 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FM – NOV 2015 – L2 – Q5b – Foreign exchange risk and currency risk management"

  • 20 Marks

IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour

Establishment of total cost function using high-low method, profit calculation for a specific production level, and identification of advantages and disadvantages of high-low method.

a) Takyi Carpentry makes twin-desk for local schools in the Daboase District. To facilitate control, the owner of the shop has asked you to assist him in analysing cost into fixed and variable elements.

Below is his six-year financial information:

Year No. of Twin-Desk Revenue (GH¢) Profit (GH¢)
2016 1,800 19,600 6,000
2017 1,700 22,000 6,200
2018 1,750 20,300 5,800
2019 2,100 26,200 8,000
2020 1,950 22,400 7,500
2021 2,050 21,800 6,800

Required: i) Establish total cost function using high-low method. (5 marks)

ii) Calculate profit for making 3,500 units of the twin-desk if the selling price is fixed at GH¢20. (3 marks)

iii) Identify TWO (2) advantages and TWO (2) disadvantages of using high-low method. (4 marks)

iv) Identify THREE (3) importance for classifying cost as fixed and variable. (3 marks)

b) For managers within a company, exercising control through standards and standard costing is a creative program aimed at determining whether the organisations’ resources are being used optimally. Standard costs are typically determined during the budgetary control process because it uses predetermined standard costs for direct material, direct labour and factory overheads.

Required: Explain THREE (3) benefits to a company that uses standard costing. (5 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "IMAC – AUG 2022 – L1 – Q5 – Costs and Cost Behaviour"

knowsia

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Community

Contact Info

  • +233203701923
    +233543919232
  • info@knowsia.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan

Pick a Form

Professional Tutor Application Form
Academic Tutor Application Form
Student Tutor Application Form