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    01 Assignment 03 Answer

    Uploaded by

    KS
    The student is asked to calculate the total profit for the next year given limited skilled labor hours available for production. Based on contribution per unit, the highest ranking products are produced first until labor hours are exhausted. 10-inch tappets and 6-inch tappets can be produced for a total contribution of Rs. 265,000. However, the total fixed cost is Rs. 280,000, resulting in an expected loss of Rs. 15,000 for the next year.

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    01 Assignment 03 Answer

    Uploaded by

    KS
    30 views11 pages
    The student is asked to calculate the total profit for the next year given limited skilled labor hours available for production. Based on contribution per unit, the highest ranking products are produced first until labor hours are exhausted. 10-inch tappets and 6-inch tappets can be produced for a total contribution of Rs. 265,000. However, the total fixed cost is Rs. 280,000, resulting in an expected loss of Rs. 15,000 for the next year.

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    01 Assignment 03 Answer (1)

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    The student is asked to calculate the total profit for the next year given limited skilled labor hours available for production. Based on contribution per unit, the highest ranking products are produced first until labor hours are exhausted. 10-inch tappets and 6-inch tappets can be produced for a total contribution of Rs. 265,000. However, the total fixed cost is Rs. 280,000, resulting in an expected loss of Rs. 15,000 for the next year.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    30 views11 pages

    01 Assignment 03 Answer

    Uploaded by

    KS
    The student is asked to calculate the total profit for the next year given limited skilled labor hours available for production. Based on contribution per unit, the highest ranking products are produced first until labor hours are exhausted. 10-inch tappets and 6-inch tappets can be produced for a total contribution of Rs. 265,000. However, the total fixed cost is Rs. 280,000, resulting in an expected loss of Rs. 15,000 for the next year.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 11

    Student Registration Number 2113001

    Enter your Registration Number above to get the Questions

    Give the answers in the same excel sheet

    Save the file in your Registration number and upload that file

    Students should answer all the Questions

    Answers should be explained in procedural steps


    Question 1
    A Laptop manufacturer provides you the following information

    Selling Price per Laptop 43,000


    Direct Material Cost per Laptop 18,000
    Direct Labour Cost per Laptop 10,000
    Total Fixed Cost for the month 30,000,000
    Production Capacity of Laptops per month 5,000 Laptops
    Current Production of Laptops per month 3,000 Laptops

    A New Order is received to supply 500 laptops at a price of Rs. 35,000


    Can the order be accepted?
    If new order is accepted, what will be the Profit for the new order of 500 laptops?

    Answer
    Calculation of Contribution per Laptop
    Selling Price 43,000
    Less: Variable Cost
    Direct Material Cost 18,000
    Direct Labour Cost 10,000

    Contribution per Unit 15,000

    Calculation of Break Even Point


    Fixed Cost for the month 30,000,000
    Contribution per Unit 15,000

    Break Even Point 2,000 [Fixed Cost / Contribution per

    As the existing production is more than the Break Even Point, the New Order can be accepted

    Calculation of Total Cost


    Variable Cost per Unit 28,000
    Fixed Cost per Unit 10,000 [Total Fixed Cost / Units Prod
    38,000

    Fixed Cost can be ignored

    Hence, New Order for 500 Laptops can be accepted at Rs. 35,000

    Profit on the Sale of New Laptops


    Number of Laptops 500
    New Selling Price 35,000
    Less: Total Variable Cost 28,000
    Contribution 7,000
    Total Contribution 3,500,000
    Profit 3,500,000
    After crossing the break even point, contribution will be equal to Profit
    Answer Summary
    Accept the Order Yes [Yes / No]
    Profit 3,500,000 If Applicable

    st / Contribution per Unit]

    Order can be accepted at any price more than the Variable Cost

    ed Cost / Units Produced]


    Question 2
    Great Time Ltd, a wall clock manufacturer provides you with the following information

    Total Units Sold 10,000 VC %


    Selling Price per Unit 500 40
    Material Cost per Unit 100
    Labour Cost per Unit 200
    Overhead Cost per Unit 100 40% Variable

    Next Year the Company is expecting following increase in cost and due to competition they cann

    Material Cost per Unit 20%


    Total Fixed Cost 10%

    Calculate the profit for the next year if company will be able to sell only 9000 units in the next yea

    Answer
    Calculation of New Profit

    Total Units to be sold 9,000

    Selling Price 500


    Less: Variable Cost
    Material Cost [WN # 1] 120
    Labour Cost 200
    Variable Cost 40
    Contribution per Unit 140

    Total Contribution 1,260,000


    Less: New Fixed Cost [WN # 2] 660,000

    Profit 600,000

    WN # 1 : New Material Cost


    Existing Material Cost 100
    Expected Increase % 20%
    Expected Increase Amount 20

    New Material Cost 120


    WN # 2 : New Fixed Cost
    Existing Overhead Cost 100
    Existing Fixed Cost % 60%

    Fixed Cost per Unit 60


    Total Units produced 10,000
    Total Fixed Cost 600,000
    Expected Increase % 10%
    Expected Increase Amount 60,000

    New Fixed Cost 660,000


    information Answer Summary
    Profit / (Loss) 600,000
    NY Units If loss give the answer with negative sign
    9000

    ompetition they cannot increase Selling Price

    0 units in the next year


    Question 3
    Winner's Edge Limited is currently working at the capacity of 60%
    Other details are
    Selling Price per Unit 30 60
    Material Cost per Unit 10
    Labour Cost per Unit 5
    Total Units produced 36,000
    Total Fixed Cost 300,000
    Next month they are planning to increase the capacity either to 75% or 85%
    Identify the profit under the new expected capacity of 75% & 85%

    Calculation of Profit
    Particulars 75% Capacity 85% Capacity
    Units to be Sold 45,000 51,000
    Selling Price per Unit 30 30
    Less: Variable Cost
    Material Cost per Unit 10 10
    Labour Cost per Unit 5 5

    Contribution per Unit 15 15

    Total Contribution 675,000 765,000


    Total Fixed Cost 300,000 300,000

    Expected Profit 375,000 465,000


    Answer Summary
    Profit at 75% 375,000
    Profit at 85% 465,000
    Question 4
    Well Done India Limited is into the production of Auto Components
    They found Skilled Labours are available in Shortage
    For the next budgeting year, they are having only 6000 hours of skilled labour available
    Their profit details for the last year is given below
    Details 4" Tappets 6" Tappets 10" Tappets
    Sale Units 8,000 4,000 2,000
    Labour Hours per Unit 2 2 2
    Sale Price 60 100 200
    Less:
    Material Cost 20 40 50
    Labour Cost 10 15 20
    Variable Overhead 5 10 15
    Contribution 25 35 115
    Total Contribution 200,000 140,000 230,000
    Allocated Fixed Overhead 160,000 80,000 40,000
    Profit 40,000 60,000 190,000

    Fixed Cost is allocated based on the number of units being produced


    Find out the Total Profit for next year

    Answer
    Details 4" Tappets 6" Tappets 10" Tappets
    Contribution 25 35 115
    Ranking 3 2 1

    Calculation of Available Hours 6000


    Units Hours Balance Hours
    Hours Required for 10" Tappets 2,000 4,000 2,000
    Hours Required for 6"Tappets 4,000 8,000 -
    - - -

    Possible Units of Production


    10" Tappets 2,000 230,000
    6" Tappets 1,000 35,000
    4" Tappets - -
    Total Contribution 265,000
    Less: Fixed Cost 280,000
    Profit / (Loss) (15,000)
    Answer
    Total Profit (15,000)
    abour available

    Possible Units
    2,000
    1,000
    -

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