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    225 Hair Co (Dec 12 Exam) : Practice Questions: Section 2

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    Ani Khachatryan
    The document provides practice questions related to calculating breakeven points, margins of safety, and drawing profit-volume charts for a business. Specifically: (a) It asks to calculate the breakeven point in units and sales revenue and margin of safety for an existing product based on its selling price and variable cost. (b) It asks to draw the profit-volume chart based on the same information. (c) It asks to recalculate the breakeven point, sales revenue, and margin of safety assuming a 10% price decrease and 5% cost reduction for the product. (d) It asks how the breakeven point has changed between the original and new calculations.

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    225 Hair Co (Dec 12 Exam) : Practice Questions: Section 2

    Uploaded by

    Ani Khachatryan
    159 views1 page
    The document provides practice questions related to calculating breakeven points, margins of safety, and drawing profit-volume charts for a business. Specifically: (a) It asks to calculate the breakeven point in units and sales revenue and margin of safety for an existing product based on its selling price and variable cost. (b) It asks to draw the profit-volume chart based on the same information. (c) It asks to recalculate the breakeven point, sales revenue, and margin of safety assuming a 10% price decrease and 5% cost reduction for the product. (d) It asks how the breakeven point has changed between the original and new calculations.

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    Accounting for decision making, problem ACCA kaplan revision kit

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    225 Hair Co

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    The document provides practice questions related to calculating breakeven points, margins of safety, and drawing profit-volume charts for a business. Specifically: (a) It asks to calculate the breakeven point in units and sales revenue and margin of safety for an existing product based on its selling price and variable cost. (b) It asks to draw the profit-volume chart based on the same information. (c) It asks to recalculate the breakeven point, sales revenue, and margin of safety assuming a 10% price decrease and 5% cost reduction for the product. (d) It asks how the breakeven point has changed between the original and new calculations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    159 views1 page

    225 Hair Co (Dec 12 Exam) : Practice Questions: Section 2

    Uploaded by

    Ani Khachatryan
    The document provides practice questions related to calculating breakeven points, margins of safety, and drawing profit-volume charts for a business. Specifically: (a) It asks to calculate the breakeven point in units and sales revenue and margin of safety for an existing product based on its selling price and variable cost. (b) It asks to draw the profit-volume chart based on the same information. (c) It asks to recalculate the breakeven point, sales revenue, and margin of safety assuming a 10% price decrease and 5% cost reduction for the product. (d) It asks how the breakeven point has changed between the original and new calculations.

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    PR AC T ICE Q UE S T ION S : S EC TI ON 2

    Required:
    (a) Calculate the breakeven point in terms of units and sales revenue, and the margin
    of safety based upon the existing selling price and variable cost per frame.
    (3 marks)
    (b) Draw the Profit/Volume chart based upon the existing selling price and variable
    cost per frame. (3 marks)
    (c) Calculate the new breakeven point in terms of units and sales revenue, and the
    new margin of safety, assuming the company not only decreases the selling price
    by 10% but also uses its own buyer power over its suppliers and secure a 5%
    reduction in variable cost per frame. (2 marks)
    (d) By how many units has the breakeven point changed? (2 marks)
    (Total: 10 marks)

    225 HAIR CO (DEC 12 EXAM)


    Hair Co manufactures three types of electrical goods for hair: curlers (C), straightening irons
    (S) and dryers (D.) The budgeted sales prices and volumes for the next year are as follows:
    C S D
    Selling price $110 $160 $120
    Units 20,000 22,000 26,000
    Each product is made using a different mix of the same materials and labour. Product S also
    uses new revolutionary technology for which the company obtained a ten-year patent two
    years ago. The budgeted sales volumes for all the products have been calculated by adding
    10% to last year’s sales.
    The standard cost card for each product is shown below.
    C S D
    $ $ $
    Material 1 12 28 16
    Material 2 8 22 26
    Skilled labour 16 34 22
    Unskilled labour 14 20 28
    Both skilled and unskilled labour costs are variable.
    The general fixed overheads are expected to be $640,000 for the next year.

    Required:
    (a) Calculate the weighted average contribution to sales ratio for Hair Co.
    Note: round all workings to 2 decimal places. (6 marks)
    (b) Using the graph paper provided, draw a multi-product profit-volume (PV) chart
    showing clearly the profit/loss lines assuming:
    (i) you are able to sell the products in order of the ones with the highest ranking
    contribution to sales ratios first; and
    (ii) you sell the products in a constant mix.
    Note: only one graph is required. (9 marks)
    (Total: 15 marks)

    KA PL AN P U BLI SH IN G 99

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