Scribd
Upload
56 views5 pages

Practice For Accounting Test

The document provides information to calculate breakeven points, operating profit percentages, and variances for two types of toy products (wooden flowers and battery-operated silk flowers) produced by a company. It is determined that dropping the less profitable product (wooden flowers with 30% operating profit vs 33.33% for silk flowers) is not recommended because both products are currently profitable and fixed costs would not decrease. Direct materials and labor variances are also calculated, with materials quantity and labor efficiency variances being favorable and others unfavorable.

Uploaded by

Nikki Mathys
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
56 views5 pages

Practice For Accounting Test

The document provides information to calculate breakeven points, operating profit percentages, and variances for two types of toy products (wooden flowers and battery-operated silk flowers) produced by a company. It is determined that dropping the less profitable product (wooden flowers with 30% operating profit vs 33.33% for silk flowers) is not recommended because both products are currently profitable and fixed costs would not decrease. Direct materials and labor variances are also calculated, with materials quantity and labor efficiency variances being favorable and others unfavorable.

Uploaded by

Nikki Mathys
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 5

Calculate the following:

If the company made only the Wooden Flowers, what would the breakeven point in units and dollars be for the month of

UCM BEP BEP $


$5.00 20000

If the company made only the Battery-operated Silk Flowers, what would the breakeven point in units and dollars be for th

UCM BEP BEP $


$16 6250 $187,500

Determine the breakeven point in units if the company makes a combination of WF and BSF flower toys in the ratio 2:1.
Show clearly the break-even units and dollars (using the ratio given) for the WF and BSF flowers under this combined brea

Weigthed UCM BEP BEP $


$8.67 11535

WF 7690 $76,900
BSF 3845 $115,350
11535 $192,250

Calculate the margin of safety percentage for the combined production of WF and BSF flower toys for the month of Octob

61.55 Percent This is a high margin of safety. Therefore, the current sales volume of 30,000 u

Determine the Operating Profit % for the WF and BSF toy products

WF 30 percent
BSF 33.33 Percent

Should Sukhraj drop the production of the least profitable flower toy product? The demand for either of the two flower to
Explain your answer in relation to your calculation in 2(i), the unchanged demand for the toy products, the fixed cost situa

The OP% show BSF at a slightly higher profitability. Should not drop, because WF is making profit $60,000 The total fixed c
Wooden Flowers (WF)
Sales (units) 20,000 units
s and dollars be for the month of October? Per unit
Sales $10
Less Costs
Direct material cost $1.50
Direct labour cost $2
point in units and dollars be for the month of October? Variable overhead $1.50
Fixed Costs $2
Total Costs $7
Operating Profit/(Loss) $3

SF flower toys in the ratio 2:1.


owers under this combined breakeven point. [Round the weighted average UCM calculation to two decimal places]

wer toys for the month of October. Explain what this percentage means for the company

current sales volume of 30,000 units can decrease by 61.55% before reachingthe breakeven point

nd for either of the two flower toy products will remain unchanged with the dropping of one of the flower products.
toy products, the fixed cost situation and any other relevant information provided for the manufacture of the flower toy products for t

g profit $60,000 The total fixed cost, $100,000 has to be covered by only BSF, if dropped WF
den Flowers (WF) Battery-operated Silk Flowers (BSF)
20,000 units 10,000 units
Total Per unit Total
$200,000 $30 $300,000

$30,000.00 $4 $40,000
$40,000.00 $5 $50,000
$30,000.00 $5 $50,000
$40,000.00 $6 $60,000
$140,000.00 $20 $200,000
$60,000.00 $10 $100,000

e flower toy products for this company.


Determine the following variances and clearly indicate whether they are favourable or unfavourable:

Direct materials price and direct materials quantity variances

Material price Material quantity


-870 Unfavourable 625
697.5 Favourable

Direct labour rate and direct labour efficiency variances

Laour rate Labour efficiency


19.5 2000
-2700 Unfavourable 3600 Favourable

You might also like