Qualification > Queries

Accounting Problem..

<< < (2/5) > >>

Monica:
Okay now for Question 3)b Oct/Nov 2004 :

The question is really easy. See he tells you about the 3 options for producing the washing machines and he is asking us to find the most profitable one from 3 of them, hence we will have to calculate the profit for each Option. Now I will just be doing part (i) 190 000 units and you guys just apply the same to the next 2 parts.
When calculating the profit we have to get the sales and the costs because Profit= Sales - costs. Now costs will be Direct Material, direct labour, variable overheads and fixed costs for options 2 and 3. For option 1 there are minimal fixed costs which are not taken into account.

i) 190 000 units for :

Option 1 :
Sales = 400*190000  =  76 000 000
Cost = 280*190000   =  53 200 000     
Profit = 76 000 000 - 53 200 000 = 22 800 000

Option 2:
Sales = 370*190 000 = 70 300 000
DM = 50*190 000 = 9 500 000
DL = 70*190 000 = 13 300 000
VO = 30*190 000 = 5 700 000
FC = 30 000 000 (Fixed cost does not change through the year because it is fixed thus it is not affected by the number of units produced)
Profit = 70 300 000 -(9 500 000 + 13 300 000 + 5 700 000 + 30 000 000) = 11 800 000

Option 3:
Exactly like option 2 but just change the numbers.
                         

Stay10:
Thanks a lot 4 the explanation..really made sense..srry again abut the same thread bein posted again in the other place.. :)

Monica:
That is alright since you didn't know the rules. You will find the rules made "sticky" in every board of the forum.

And you are right this thread is better in "Subject Doubts/HELP" section, so I will move it there and remove the other one. =]

***exam***:
in oct/nov 04 paper 2 only
Q3 d)  says       Calculate the minimum level of production at which it is better to manufacture rather than buy in stock.

    and the answer given is FC/ (contri - profit in buying )
   here why do we substract profit in buying ??

Stay10:
sum more doubts came up nd needed sum help..the paper is may/june 2005, question 3 b..(how do v get the quantity..) nd part c aswell..ll be w8in 4 the answer..Thanks.. :)

Navigation

[0] Message Index

[#] Next page

[*] Previous page