Develop this years profit picture based on 20% drop in business ( no price incre
ID: 2580100 • Letter: D
Question
Develop this years profit picture based on
20% drop in business ( no price increase) ( Bob will take action indicated)
•Revenue
•Material Cost ( per unit) (total)
•Labor Cost ( show it in the 4 categories indicated)
•Total salary & wages
•Overhead
•Depreciation
•Profit before tax
•Taxes paid
•Profit after tax
•Cash flow
The given data is
2017 units sold 65,000 sales price $84 total revenue $5,460,000 Material cost 45 total material 2,925,000 wages & labor Owner 100,000 Supervisors (3) 150,000 Indirect (4) 120,000 Hourly (30) 750,000 total labor & wages 1,120,000 Overhead 280,000 Depreciation 65,000 Total costs 4,390,000 PBT 1,070,000 Tax 363,800 PAT 706,200 Cash flow 771,200Explanation / Answer
Particulars This year (Drop 20% ) 2,017 Unit Sold 52,000 65,000 (80% of 65,000 units) Selling Price = 84 84 Total Sale Revenue 43,68,000 54,60,000 Less: Material Cost (45 per unit) 23,40,000 29,25,000 ($ 45 X 52000 units) Labour Owner $ 1,00,000 $ 1,00,000 Supervisor $ 1,50,000 $ 1,50,000 Indirect $ 1,20,000 $ 1,20,000 Hourly $ 6,00,000 $ 7,50,000 (80% of $ 750,000) Overhead $ 2,24,000 $ 2,80,000 (80% of $ 280,000) Depreciation 65,000 65,000 Total Cost 35,99,000 43,90,000 PBT 7,69,000 10,70,000 Tax 2,61,460 3,63,800 34.0% 34.0% PAT 5,07,540 7,06,200 Cash Flow 5,72,540 7,71,200 (Add: Depreciation of $ 65,000)
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