Preparing Financial forecasts

Question 01


Hiru Company
Operating Statement

A007 $
Direct Material X
150.00
Direct Material Y
25.00
Direct Labour
120.00
Royalty Payment
100.00
Special Machine Cost
500.00
Prime Cost
895.00

Production Overheads
Department A (5000/1000)
50.00
Department B (8000/160)
500.00
Total Production O/H
Cost 550.00


Total Production Cost
1,445.00
Distribution Cost
89.50
Administration Cost
170.50
Total Cost
1,705.00
Profit
341.00
Selling Price
2,046.00


Mark Up

, Cost + Profit = Selling price
100 + 20 = 120
1705 + 341 = 2046


Question 02


i. Contribution = Selling Price - Variable Cost
= 15 - 10
= 5


ii. BEP (Volume) = Fixed Cost
Contribution
= 5000
5
= 1000




BEP (Value) = Fixed Cost * Selling Price
Contribution
= 5000 * 15
5
= 15,000




iii. C/S Ratio = Contribution
Selling Price
= 5
15
= 0.333333333