Short-term Planning Decision
Angel ltd produces two products A and B. these products are produced and sold in a constant proportion such that for every 3 units of A produced / sold 2 units of B are also produced / sold.
Each unit of A is sold at T.shs. 100 and has variable costs of T.shs 70 while each unit of B is sold at T.shs 50 and has variable costs of T.shs 30.
Fixed costs amount at T.shs 39,000
Required:
Angel and company is engaged in providing and marketing a standard clearing services. The summarized result for the past two months, recall the following:
October | November | |
---|---|---|
Sales (units of service) | 200,000 | 300,000 |
Sales | 5,000,000 | 7,500,000 |
Operating profit | 1,000,000 | 2,200,000 |
There was no price change any description during these two months.
Required:
A hotel group prepares accounts on quarterly basis. The senior manager was reviewing the performance of the Hotel and making plans for the next year based on some actual results and some forecasts to the end of this year.
Quarter | Sales (T.shs) | Profit (T.shs) |
---|---|---|
1 | 400,000 | (280,000) |
2 | 1,200,000 | 360,000 |
3 | 1,600,000 | 680,000 |
4 | 800,000 | 40,000 |
Total | 4,000,000 | 800,000 |
The total estimated number of visitors this year is 50,000. The result follow a regular pattern, there being no unexpected cost fluctuations beyond the seasonal trading patterns exhibited. The manager intends to incorporate in his plans for the next year an anticipated increase in unit variable cost of 10% and a profit target for hotel of T.shs 1,000,000
Required:
Z ltd manufactures and sales three products with the following selling prices and variable cost
Product A | Product B | Product C | |
---|---|---|---|
SP | 300 | 245 | 400 |
VC | 120 | 167 | 260 |
The company is considering expenditure on advertising and promotion of a product A. It is hoped that such expenditure, together with reduction in the selling price of the product would increase sales. Existing annual sales volume of the three products is
Product A | 460,000 units |
Product B | 1,000,000 units |
Product C | 380,000 units |
If T.shs 6 million per annum was to be invested in advertising and sales promotion, sales of product A at reduced selling price expected to be:
590,000 units at T.shs 275 per unit
Or
650,000 units at T.shs 255 per unit
Annual fixed costs are currently T.shs 171 million per annum.
Required:
Mayunga Plc manufacture one standard product which sales at T.shs 100. For the 6 months presented data, You are required to compute the following:
Month | Sales (units) | Profit / Loss |
---|---|---|
Nov | 30,000 | 400,000 |
Dec | 35,000 | 600,000 |
Jan | 15,000 | (200,000) |
Feb | 24,000 | 160,000 |
March | 26,000 | 240,000 |
April | 18,000 | (80,000) |
Michelle Company produces three Products. In order to plan for the coming year, the company generated detailed information in relation to sales forecasts. Among them was the following data:
Products | NGANO | MTAMA | ULEZI |
Planned sales price (T.shs) | 7,500 | 8,000 | 9,000 |
Sales value budget (T.shs) | 42,000,000 | 11,200,000 | 27,000,000 |
Anticipated margin of safety ratio | 36% | 40% | 24% |
Fixed factory cost ‘budget’ T.shs | 10,752,000 | 1,680,000 | 6,156,000 |
Required:
Michelle Ltd produces and sales the following two products throughout the year in a constant mix:
Korosho | Karanga | |
Variable cost per T.shs of sales | 0.45 | 0.60 |
Fixed costs (T.shs) | 1,212,000 per period |
The management of Michelle has stated that total sales revenue will reach a maximum of T.shs 4,000,000 and is generated by two products in the following proportions:
Korosho | Karanga | |
Sales mix | 70% | 30% |
Required
Makojo Company has an opening stock of 6,000 units of output. The production planned for the current period is 24,000 units and expected sales for the current period amount to 28,000 units. The selling price per unit of output is TZS 1,000. Variable cost per unit is expected to be TZS 600 per unit while it was only TZS 500 per unit during the previous period.
Required:
Calculate the Break-Even volume for the current period if the total fixed costs for the current period is TZS 8,600,000.
Calculate from the following data:
(i) The Sales Revenue at which the business breaks even and (ii) The percentage capacity at which it breaks even.
Budget for the year 2021 based on 100% capacity (TZS) |
Estimated shutdown expenditure (TZS) |
|
Direct labour | 2,100,000 | |
Direct materials | 2,400,000 | |
Work expenses | 1,850,000 | 930,000 |
Selling and distribution expenses | 610,000 | 401,000 |
Adminnistration expenses | 300,000 | 205,000 |
Net sales | 8,500,000 |
PAMBA Ltd. and KATANI Ltd. are two manufacturing companies which intends to merge this year. The following are some of the operating information:
PAMBA Ltd. (shs) | KATANI Ltd. (shs) | |
Capacity utilization | 80% | 50% |
Sales | 64,800,000 | 36,000,000 |
Variable costs | 46,800,000 | 27,000,000 |
Fixed costs | 9,600,000 | 6,000,000 |
Required:
If Total sales is T.shs 13,500,000/= and Margin of Safety Ratio is changed from 30 per cent to 60 per cent. By how much will the profitability be affected taking 20 per cent PV Ratio?
Myamongo Manufacturing company made a 10% profit on sales of 1 million in the last trading year. The composition of its costs was direct labour 25%, direct material 60% and fixed overhead 15%.
The general manager has drawn your attention to the fact that, although the sales were just below the forecast, the profit was very much lower than expected.
Your initial investigation shows that significant difference appears to be caused by the direct labour cost. The company uses marginal costing technique to price its products. In all price quotations, direct labour was trated as variable cost directly related to the volume of output. However, the review indicates that, the direct labour cost showed little change when output increased for any reason.
You are requied to:
State the sales value at BEP and the margin of safety when the direct labour are treated as
(i) Variable cost
(ii) Fixed cost