P1 Exam Question 6
A manufacturing company produces and sells a single product.
It is preparing its budget for the next period and expects to breakeven.
Budgeted fixed costs are the same as budgeted variable costs and the budgeted contribution to sales ratio is 50%.
If all budgeted costs decreased by 10%, which of the following statements is true?
It is preparing its budget for the next period and expects to breakeven.
Budgeted fixed costs are the same as budgeted variable costs and the budgeted contribution to sales ratio is 50%.
If all budgeted costs decreased by 10%, which of the following statements is true?
P1 Exam Question 7
In a manufacturing company, breakeven occurs at which TWO of the following?
P1 Exam Question 8
Place the correct label against each item to categorise the cost of the item within the quality cost framework.
P1 Exam Question 9
A small manufacturing company makes a single product. Direct labour costs and factory rent account for
80% and 15% of total cost respectively. Activity levels have not varied by more than 5% for a number of years and there is no evidence of operational inefficiency.
Which of the following is the most appropriate approach to budgeting for this company?
80% and 15% of total cost respectively. Activity levels have not varied by more than 5% for a number of years and there is no evidence of operational inefficiency.
Which of the following is the most appropriate approach to budgeting for this company?
P1 Exam Question 10
JL is preparing its cash budget for the next three quarters. The following data have been extracted from the operational budgets:
Additional information is available as follows:
* JL sells 20% of its goods for cash. Of the remaining sales value, 70% is received within the same quarter as sale and 30% is received in the following quarter. It is estimated that trade receivables will be
$125,000 at the beginning of Quarter 1. No bad debts are anticipated.
* 50% of payments for direct material purchases are made in the quarter of purchase, with the remaining 50% in the quarter following purchase. It is estimated that the amount owing for direct material purchases will be $60,000 at the beginning of Quarter 1.
* JL pays labour and overhead costs when they are incurred. It has been estimated that labour and overhead costs in total will be $303,600 per quarter. This figure includes depreciation of $19,600.
* JL expects to repay a loan of $100,000 in Quarter 3.
* The cash balance at the beginning of Quarter 1 is estimated to be $49,400 positive.
Required:
Prepare a cash budget for each of the THREE quarters.
What will the closing balance of cash flows in quarter THREE be?
Additional information is available as follows:
* JL sells 20% of its goods for cash. Of the remaining sales value, 70% is received within the same quarter as sale and 30% is received in the following quarter. It is estimated that trade receivables will be
$125,000 at the beginning of Quarter 1. No bad debts are anticipated.
* 50% of payments for direct material purchases are made in the quarter of purchase, with the remaining 50% in the quarter following purchase. It is estimated that the amount owing for direct material purchases will be $60,000 at the beginning of Quarter 1.
* JL pays labour and overhead costs when they are incurred. It has been estimated that labour and overhead costs in total will be $303,600 per quarter. This figure includes depreciation of $19,600.
* JL expects to repay a loan of $100,000 in Quarter 3.
* The cash balance at the beginning of Quarter 1 is estimated to be $49,400 positive.
Required:
Prepare a cash budget for each of the THREE quarters.
What will the closing balance of cash flows in quarter THREE be?