Q 1 DK Company has projected sales and production in units for the second quarter of the year as follows :
A. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses (all paid in cash) amount to $60,000 per month. The accounts payable balance on March 31 totals $96,000, all of which will be paid in April. Prepare a schedule for each month showing budgeted cash disbursements for DK Company.
B. Assume that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale and the remaining 10% in the second month following the month of sale. Accounts receivable on March 31 totaled $255,000 $(45,000 from February’s sales and the remainder from March.) Prepare a schedule for each month showing budgeted cash receipts for DK Company.
Q2. K Ltd provided the following data concerning its only product:
Selling Price …………..SAR 200 per Unit
Current Sales ……………..18, 800 Units
Break-even Sales………….14,288 Units
Compute the margin of safety in Riyal and as a percentage of sales.
Q3. KK Corporation produces and sells a product whose selling price is $110.00 per unit and whose variable expense is $29.70 per unit. The company’s monthly fixed expense is $345,290.
A. Break Even Point in Unit
B Break Even Point in Dollar.
Assume the company’s monthly target profit is $16,060. Determine the unit sales to attain that target profit. Show your work!
D. Assume the company’s monthly target profit is $40,150. Determine the dollar sales to attain that target profit. Show your work!
Q 4. what do you mean by Variable and Absorption Costing? Explain both with suitable example.
Explanation & Answer:
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