please i need the solve for A&B&C&D&E ESPECIALLY B&C&D&E Company Information Woo
ID: 2512272 • Letter: P
Question
please i need the solve for A&B&C&D&E
ESPECIALLY B&C&D&E
Company Information
Wood Work Ltd manufacture specialist wood furniture and sell their products all over Saudi Arabia. The company was established three years ago in Jeddah and is performing well to date. Wood work Ltd have three main product lines; TV tables, dining table and chairs. The following financial information has been provided.
Financial Information
TV tables
dining Tables
Chairs
Selling Price per unit
SAR 1,000
SAR 5,000
SAR 700
Direct Materials (wood timber) cost
SAR 50
SAR 50
SAR 50
Kg of wood timber required per unit
10
25
5
Direct Labour hour cost per unit
SAR 30
SAR 30
SAR 30
Sales commission per item sold
SAR 10
SAR 15
SAR 5
Variable manufacturing overhead per unit
SAR 20
SAR 24
SAR 18
Number of labour hours per unit
3
4
2
Budgeted sales in units
300
200
450
Additional Information:
Other costs:
Production manager annual salary SAR 60,000
Annual marketing costs SAR 10,000
General Expenses SAR 5,000
Annual Fixed manufacturing overhead (excluding depreciation) SAR10,000 (20% relates to TV tables )
The company bought specialised equipment 3 years ago which cost SAR100,000. The useful life of this equipment is 10 years. Depreciation is allocated to manufacturing overhead expenses.
The company had 8 TV tables and 100 kg of wood timber in stock at the end of June.
Company policy is to maintain 20% of the following months sales level as closing inventory for finished goods.
Company policy to maintain 25% of next months production needs as closing inventory for direct materials.
Budgeted sales of handbags for the next six months are as follows:
Cash collections on sales are as follows:
30% in the month of sale
70% in the month following sale
Receivables at the end of June were SAR 22,000
Cash payments on purchases are as follows:
60% in the month of purchase
40% in the following month
Payables at the end of June were SAR 6,000
The closing cash balance in June 2017 was SAR 40,000 and it is company policy to maintain cash at this level at the end of each month.
The company have access to a 4% bank loan of SAR 60,000
The company paid a dividend of SAR 40,000 in August
Cash of SAR 50,000 was invested in the company by a private investor in September.
Requirement:
Your group has been employed as the management accountants for Fashion Designers Ltd and have been asked to prepare a report to the board of directors outlining the following:
Using the information above, calculate the following: (25marks)
Which product is performing the best?
Calculate the overall break-even point in sales value for the company and the break-even point in sales valuefor each product line.
If the selling price of TV tables is increased to SAR 1,200 per unit, what will be the increase in overall profit.
What level of sales (value) must the company achieve to make a profit of SAR 1,500,000.
Using the original information presented, draw a CVP graph outlining the costs, break-even point and profit and loss area for Wood work Ltd and comment on the overall performance of the company.
The company is considering eliminating sales commission and increasing salaries by SAR40,000. Outline the implications of making this decision on the overall break-even point in sales value and the overall profit or loss for the company. Should the company proceed with this decision?. (10 marks)
The company is considering discontinuing the manufacture of chairs and have asked you to advise them on this decision. (35% of annual marketing costs relate specifically to this product and SAR1,500 of general expenses is directly attributable to this product). (10 marks)
Using the information above, prepare the master budget for TV tables onlyfor the quarter ending 30thSeptember 2014. (30 marks)
The company are considering implementing a balanced scorecard system. Outline how this could be implemented in this company giving at least three performance measures for each perspective. Include in your answer the advantages and disadvantages of traditional budgeting and advise the company on whether you believe it is a good decision to implement ‘the balanced scorecard’ system in this company. (25marks)
Financial Information
TV tables
dining Tables
Chairs
Selling Price per unit
SAR 1,000
SAR 5,000
SAR 700
Direct Materials (wood timber) cost
SAR 50
SAR 50
SAR 50
Kg of wood timber required per unit
10
25
5
Direct Labour hour cost per unit
SAR 30
SAR 30
SAR 30
Sales commission per item sold
SAR 10
SAR 15
SAR 5
Variable manufacturing overhead per unit
SAR 20
SAR 24
SAR 18
Number of labour hours per unit
3
4
2
Budgeted sales in units
300
200
450
Additional Information:
Other costs:
Production manager annual salary SAR 60,000
Annual marketing costs SAR 10,000
General Expenses SAR 5,000
Annual Fixed manufacturing overhead (excluding depreciation) SAR10,000 (20% relates to TV tables )
The company bought specialised equipment 3 years ago which cost SAR100,000. The useful life of this equipment is 10 years. Depreciation is allocated to manufacturing overhead expenses.
The company had 8 TV tables and 100 kg of wood timber in stock at the end of June.
Company policy is to maintain 20% of the following months sales level as closing inventory for finished goods.
Company policy to maintain 25% of next months production needs as closing inventory for direct materials.
Budgeted sales of handbags for the next six months are as follows:
July August September October November December 40 35 20 20 20 20Cash collections on sales are as follows:
30% in the month of sale
70% in the month following sale
Receivables at the end of June were SAR 22,000
Cash payments on purchases are as follows:
60% in the month of purchase
40% in the following month
Payables at the end of June were SAR 6,000
The closing cash balance in June 2017 was SAR 40,000 and it is company policy to maintain cash at this level at the end of each month.
The company have access to a 4% bank loan of SAR 60,000
The company paid a dividend of SAR 40,000 in August
Cash of SAR 50,000 was invested in the company by a private investor in September.
Explanation / Answer
The profitabiltiy of each product and total profit is presented below:
Dining tables is performing the best as it has the highest contribution margin amongst all the products.
Break even point = fixed expensses / contribution margin ratio
Break even point for company in sales value = 90000 / 0.63
= SAR 141,964
contribution margin ratio = total sales / total contribution margin
For break even sales for each product, we will divide the break even point for the company in sales mix ratio
The new profit with an increase in sales price of TV tables to SAR1200
Therefore increase in profit = 993850 - 933850
= SAR 60,000
Level of sales to achive desired profit of SAR 15,00,000 = (fixed expenses + desired profit) / contribution margin ratio
= (90000 + 1500000) / 0.63
= SAR 25,23,810
TV tables dining tables Chairs Total Sales units 300 200 450 Selling price per unit 1,000 5,000 700 DM per unit 500 1,250 250 Direct labour cost per unit 90 100 10 variable manufacturing overhead 20 24 18 sales commission per unit 10 15 5 contribution margin per unit 380 3,611 417 Contribution margin 1,14,000 7,22,200 1,87,650 10,23,850 Fixed expenses Manager salary 60,000 Marketing costs 10,000 Fixed manufacturing overhead 10,000 Depreciation 10,000 Net income 9,33,850Related Questions
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