- 15 Marks
MA – L2 – Q41 – Cost-volume-profit (CVP) analysis
Calculate breakeven point in units and sales value for Nartey Enterprises based on budgeted profit statement.
Question
Nartey Enterprises, a manufacturing organisation, has a budgeted profit statement for its next financial year, when it is expected to be operating at 75% level of capacity. The budget is given below:
| GH₵ | GH₵ | |
|---|---|---|
| Sales 9,000 units at GH₵32 | 288,000 | |
| Less: | ||
| Direct materials | 54,000 | |
| Direct wages | 72,000 | |
| Production overhead: | ||
| fixed | 36,000 | |
| variable | 18,000 | |
| Administration and distribution costs: | ||
| fixed | 42,000 | |
| variable | 27,000 | 249,000 |
| Profit | 39,000 |
Required:
(a) Calculate the breakeven point in units and in sales value.
(b) Calculate the contribution/sales ratio. (c) Calculate the number of units to be sold to earn a profit of GH₵52,000.
(d) Calculate the profit that would be expected if the company operated at full capacity.
Find Related Questions by Tags, levels, etc.
- Tags: Breakeven analysis, contribution margin, fixed costs, Sales value, variable costs
- Level: Level 2
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