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3 marksCost-Volume-Profit (CVP) Analysis

CAPE Accounting Unit 2 · 2002 · Paper 2 · Question 3(a)(iv)

The Aripo Company manufactures and sells a single product. Quarterly sales and expenses for the last quarter of 2001 are given.

Using the sales level arrived at (iii) prepare a contribution income statement.

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Other parts of this question

  1. 3(a)(i)Calculate the company's contribution margin ratio.[1 mark]
  2. 3(a)(ii)Compute the quarterly break-even point in units sold and in sales dollars.[3 marks]
  3. 3(a)(iii)How many units would have to be sold each quarter to earn a target profit of $90,000?[2 marks]
  4. 3(a)(v)Compute the company's margin of safety in both dollar and percentage terms.[2 marks]
  5. 3(a)(vi)If existing sales increase by $50,000 per quarter and there is NO change in fixed expenses, by how much would you expect quarterly net income to increase?[1 mark]
  6. 3(a)(vii)Management considers using a faster machine which increases variable expenses by…[6 marks]
  7. 3(a)(viii)Using the information contained in the requirement above calculate the new break-even point in units.[2 marks]
  8. 3(b)(i)Calculate the price and efficiency variances for materials used in the production of Westext.[5 marks]
  9. 3(b)(ii)Calculate the rate and efficiency variances for direct labour employed in the production of Westext.[5 marks]
  10. 3(b)(iii)Calculate the variable overhead spending and efficiency variance.[5 marks]

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