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Accounting for Business Decision Making

In: Business and Management

Submitted By AliNafiz
Words 2299
Pages 10
Accounting for Business Decision Making
Assignment
Ali Nafiz S1409011055

Submitted on 9th November, 2014

Table of Contents
Task 1 Task 2 Task 3 2-4 5-7 8-10

1

Ali Nafiz S1409011055

TASK 1 a) Anhad Sdn. Bhd. Budgeted statement of profit for the year ending 31 October 2014 RM (000s) Revenue (120000 × 8)1 Less Variable overheads Direct Materials (1200 × 2) × 95%2 Direct Labour (1200 × 1.32)3 Production overheads Selling overheads Distribution overheads Contribution Less Fixed overheads7 Indirect labour Production overheads Selling overheads Distribution overheads Administration overheads Budgeted Net profit 350 800 450 150 750 2500 1576 2280 1584 6004 6405 4206 5524 4076 RM (000s) 9600

1 2

Sales volume increase by 50%, which is equal to 800000 × 150% = 1200000. And the new selling price is RM 8. Material cost per unit is RM2, which remains unchanged, and 5% discount is given on the total. 5% discount would mean the budgeted cost for 2014 would be 95% of the cost of 2013. 3 Assuming that production of one unit takes 1 hour, for 800,000 units it takes 800,000 hours, which means labour 960,000 cost per hour is = 1.2, The new cost/hr for 2014 is 1.2 × 110% = 1.32.
800000
4 5 6

Production overheads increase in proportion with the 50% increase in sales volume;
480,000 280,000

400,000 800,000

× 1200,000 = 600,000

Variable selling overheads increase in line with the sales revenue; 7200,000 × 9600,000 = 640,000.

Distribution overheads increase in line with 50% increase in sales volume; 800,000 × 1200,000 = 420,000 7 All fixed overheads increase by 25%.
2

Ali Nafiz S1409011055

b) Break-even point8: BEP = Fixed cost Contribution per unit

BEP of 2013: Total fixed cost of 2013: 280,000 + 640,000 + 360,000 + 120,000 + 600,000 = RM 2,000,000 Total contribution = Sales – Variable cost: 7,200,000 – 3,720,000 = RM 3,480,000

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