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    Pat Miranda, The New Controller of Vault Hard Drives

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    laale dijaan
    The document appears to contain numerical calculations related to manufacturing operations, costs, and profitability under traditional and new costing approaches. It includes income statements, calculations of additional output required, and comparisons of net operating income under the different approaches. Calculations are shown for budgeted and actual production quantities, manufacturing and selling costs, gross margin, and net operating income.

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    Pat Miranda, The New Controller of Vault Hard Drives

    Uploaded by

    laale dijaan
    103 views11 pages
    The document appears to contain numerical calculations related to manufacturing operations, costs, and profitability under traditional and new costing approaches. It includes income statements, calculations of additional output required, and comparisons of net operating income under the different approaches. Calculations are shown for budgeted and actual production quantities, manufacturing and selling costs, gross margin, and net operating income.

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    Pat Miranda, the new controller of Vault Hard Drives,

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    The document appears to contain numerical calculations related to manufacturing operations, costs, and profitability under traditional and new costing approaches. It includes income statements, calculations of additional output required, and comparisons of net operating income under the different approaches. Calculations are shown for budgeted and actual production quantities, manufacturing and selling costs, gross margin, and net operating income.

    Copyright:

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

    Pat Miranda, The New Controller of Vault Hard Drives

    Uploaded by

    laale dijaan
    The document appears to contain numerical calculations related to manufacturing operations, costs, and profitability under traditional and new costing approaches. It includes income statements, calculations of additional output required, and comparisons of net operating income under the different approaches. Calculations are shown for budgeted and actual production quantities, manufacturing and selling costs, gross margin, and net operating income.

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    You are on page 1of 11

    Budgeted e 80000 units Ques 1

    Budgeted s 80000 units a.


    Capacity 100000 units
    sp 72
    vc 17
    total mfr O 1920000
    selling an 2264000
    beginning i 0

    Traditional 24
    b.
    revenue 80000 72 5760000
    cost
    vm 80000 17 1360000
    moh applie 80000 24 1920000 3280000
    gm 2480000
    selling 2264000
    noi 216000

    new appro 19.2


    Ques 2
    revenue 80000 72 5760000
    cost
    vm 80000 17 1360000
    moh applie 80000 19.2 1536000 2896000
    gm 2864000
    cost of unu 20000 19.2 384000
    selling 2264000
    noi 216000

    Ques 1 76000
    Ques 3
    Ques 2 76000 216000
    Ques 3 76000 216000
    Income statement (Traditional)
    Sales 5472000 76000*72
    cost
    Variable manufacturing 1292000 76000*17
    Manufacturing overhead applied 1824000 3116000 76000*24
    Gross margin 2356000
    Selling and administrative expenses 2264000
    Net operating income 92000

    Income statement (New Approach)


    Sales 5472000 76000*72
    cost
    Variable manufacturing 1292000 76000*17
    Manufacturing overhead applied 1459200 2751200 76000*19.2
    Gross margin 2720800
    Cost of unused capacity 384000 (100000-80000)*19.2
    Selling and administrative expenses 2264000
    Net operating income 72800

    Additional net operating income required


    to attain target net operating income 124000
    216000-92000
    (this is when co is producing 80000 units and selling 760000 units)
    Fixed overhead applied to each additioanl unit of inventory 24
    Additonal output required 5167
    124000/24
    Estimated number of units produced 80000
    Actual number of units to be produced 85167

    Additional net operating income required


    to attain target net operating income 143200
    216000-72800
    (this is when co is producing 80000 units and selling 760000 units)
    Fixed overhead applied to each additioanl unit of inventory 19.2
    Additonal output required 7458
    143200/19.2
    Estimated number of units produced 80000
    Actual number of units to be produced 87458
    76000*19.2

    (100000-80000)*19.2
    commission 26% Ques 1
    Breakven in dollars
    sales 31500000 (2630000+2045000)/0.18
    cogs
    var 17640000 Variable cost of goods sold
    fixed 2630000 20270000 17640000/31500000
    gross margin 11230000 Variable Selling & Marketing costs
    selling 8190000/31500000
    commsisions 8190000 total
    fixed costs 2045000 10235000
    oi 995000 contribution margin

    comm 15% Ques 2


    fc 2091000 Breakven in dollars
    (2630000+2045000+2091000)/0.29
    Ques 3 31500000
    Variable cost of goods sold
    17640000/31500000
    Variable Selling & Marketing costs

    total

    contribution margin

    Ques 3

    Revenues
    Variable manufacturing costs
    31500000*0.56/0.56
    Variable marketing costs
    31500000*0.26/0.15
    Contribution margin
    Fixed costs
    Fixed manufacturing costs
    fixed marketing costs
    Total fixed costs operating income
    Operating income

    Degree of operating levarage


    $ 25,972,222.22

    56%

    26%

    82%

    18.00%

    $ 23,331,034.48

    56%

    15%

    71%

    29.00%

    Using Sales Agents Employing own sales staff


    31500000 31500000
    17640000 17640000

    8190000 4725000

    5670000 9135000

    2630000 2630000
    2045000 4136000
    4675000 6766000
    995000 2369000

    5.70 3.86
    working Year end Amount PV Factor @ 5%
    Owners Capital 8,000.00 1 $ 4,700.00 0.9524
    Paid rent (700.00) 2 $ 4,700.00 0.907
    Purchased equipment (4,000.00) 3 $ 4,700.00 0.8638
    Office supplies (750.00) 4 $ 4,700.00 0.8227
    Bill a client - 5 $ 4,700.00 0.7835
    Received accounts receivable 7,800.00 6 $ 4,700.00 0.7462
    Cash balance 10,350.00 7 $ 4,700.00 0.7107
    8 $ 4,700.00 0.6768
    9 $ 4,700.00 0.6446
    10 $ 4,700.00 0.6139
    $ 47,000.00
    Present values
    $ 4,476
    $ 4,263
    $ 4,060
    $ 3,867
    $ 3,682
    $ 3,507
    $ 3,340
    $ 3,181
    $ 3,030
    $ 2,885
    $ 36,292
    I II III IV Asssuming division two is eliminated
    Sales 250000 198000 499000 447000
    COGS 195000 194000 298000 250000 I III IV
    Selling 70300 62000 57000 49000 Sales
    income -15300 -58000 144000 148000

    I II III IV
    COGS 74% 92% 78% 73%
    Selling 37% 57% 51% 59%

    discontiun 50%
    Total
    debt 2500 bonds 7%
    1000 par Debt
    YTM 6.56% Equity
    sell 105% Preferrence shares
    total
    cs 60000 64 b 1.09
    Equity
    psc 8500 6.00% 100 107
    Preferrence shares
    market rm 9.00%
    rf 6.00% Debt

    tax 34%
    We have taken YTM of the bond which is
    Market value % Weight Cost of Capital WACC
    2625000 35.60% 4.33% 1.54%
    3840000 52.07% 15.81% 8.23%
    909500 12.33% 5.61% 0.69%
    7374500 100.00% 10.46%

    15.81%
    (0.06)+(1.09*(0.09))
    5.61%
    (0.06/107*100)
    4.33%
    (0.06558*(1-0.34))

    6.56%

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