Variable Cost and Company

 Essay about Variable Cost and Firm

Section B

Strive Any 6 Questions (6*5= 30)

1 . Company A's costs are generally variable, whereas Company B's costs are mostly fixed. When ever sales increase, which company will tend to understand the greatest increase in profits? Explain.

2 . Ravenscroft Telecom provides budgeted the sales of its impressive mobile phone within the next 4 months as follows: Sales in Units

September.............. 30, 000

August........... 45, 000

Sept. 2010........ 60, 500

October.......... 40, 000

The business is now in the process of planning a production budget for the 3rd quarter. Earlier experience has shown that end-of-month inventories of finished merchandise must similar 10% from the next month's sales. The inventory towards the end of Summer was several, 000 models.


Make a production cover the third one fourth showing the quantity of units to get produced each month and for the quarter as a whole.

3. A Trading Companies is the supplier for two products, Model A100 and Model B900. Month to month sales plus the contribution margin ratios to get the two goods follow: Merchandise

Model A100 Model B900 Total

Sales.................... $700, 500 $300, 000 $1, 1000, 000 Contribution margin proportion....... 60% 70 percent?

The company's set expenses total $598, five-hundred per month.


1 . Prepare a contribution file format income affirmation for the company as a whole. installment payments on your Compute the break-even level for the business based on the current sales blend.

4. The next information is usually extracted from your books of Nepal Lubricant Oil Limited.,

Specifics | 2008Amount Rs. | 2009 Volume Rs.

Bills payable Trade credit card companies Out standing expensesBills receivables Trade debtors Prepaid expenditures Accrued incomes Income received in advance | 1000024000400040000800004000100004000| 16000320002000360001200006000160002000|


Nepal Lube Petrol Ltd received profit of Rs. 400000 after recharging or crediting the following items to its revenue and reduction account during the year 2009. a. Profit available for purchase of expense Rs. 8000

b. Reduction on sale of creating Rs. 18000

c. Devaluation on Fixed assets Rs. 14000

d. Goodwill drafted off Rs. 4000


i. Determine cashflow from procedure

5. Just how would you evaluate the following statements: " A statement of cash runs is needless, and actually repetitive, because the maximize or reduction in cash to get the period could be easily computed by noticing at the funds account in two successive balance sheets”?

six. Tata Firm uses a predetermined overhead level of $23. 10 per direct labor-hour. This established rate was based on doze, 000 believed direct labor-hours and $277, 200 of estimated total manufacturing overhead. The company sustained actual total manufacturing expenses of $266, 000 and 12, six-hundred total direct labor-hours throughout the period.


Determine how much manufacturing cost to do business that would have been applied to units of product during the period.

7. Operating data pertaining to Zerox Firm are proven below:

Per Unit Percent of Product sales

Selling price................ $75 100%

Changing expenses........... forty-five 60%

Contribution margin.......... $30 40%

Set expenses are $75, 500 per month plus the company is definitely selling several, 000 products per month.


a. The marketing administrator argues that the $8, 500 increase in the monthly advertising budget would increase monthly revenue by $15, 000. If the advertising budget end up being increased? n. Refer to the original data. Managing is taking into consideration using higher-quality components that would increase the varying cost by $3 every unit. The marketing manager believes the higher-quality item would boost sales by simply 15% each month. Should the high quality components be applied?

Section C

Strive any 3 questions (3*10= 30)

12. Company makes and markets a single...