oanodc

1. Question NO 1
Requirement A Amount
Sellingprice $ 50
Variable cost
Direct Material $ 8
Direct Labor $ 10
Variable overhead $ 2
total Variable cost $ 20
Contribution Margin $ 30
Total Fixed Cost $ 600,000
Break Even in Units 20000 Units
Forecasted Sale 30000 units
Sales revenue 1500000
Variable Cost
Direct Material $ 240,000
Direct Labor $ 300,000
Variable overhead $ 60,000
total Variable cost $ 600,000
ContributionMargin $ 900,000
Total Fixed Cost $ 600,000
Profit $ 300,000

2. (B) Per unit
Selling price 40 $ 1,400,000
$ -
Direct Material 6 $ 210,000
Direct Labor 12 $ 420,000
Variable overhead 2 $ 70,000
Total Variable cost 20 $ 700,000
Contribution Margin 20 $ 700,000
Fixed cost
Fixed Overhead $ 600,000
Advertising $ 20,000
Total Fixed Cost $ 620,000
NewProfit $ 80,000
Break Even Point 31000 Units
Special Order
C Sales revenue 120000
Less: Variable cost
Direct Material 40000
Direct Labor 50000
Variable Overhead 10000
Total Variable Expense 100000
ContributionMargin 20000
Fixed cost in this decision is irrelevantit will
incur whether we accept the order or not
The Overseas Order should beexpected becouse it generates
Positive contribution Margin

3. Question No 2
0 1 2 3 4 5 5
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Residual Value
Research Expense $ 0.20 $ -
Project Site Investment $ 2.60 $ 2.70
New machine and equipment $ 5.50 $ 2.50
Working Capital $ 0.80 $ 0.80
Sales $ 6.20 $ 6.60 $ 6.90 $ 6.10 $ 6.70
Cost $ 2.10 $ 2.20 $ 2.40 $ 2.30 $ 2.20
Depreciation $ 0.60 $ 0.60 $ 0.60 $ 0.60 $ 0.60
general Overhead $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30
Loss on contribution $ 0.90 $ 0.90 $ 0.90 $ 0.90 $ 0.90
New Employees Cost
$
(0.02)
$
(0.02) $(0.02) $(0.02) $(0.02)
Total Cash Flows
$
(9.10) $ 2.32 $ 2.62 $ 2.72 $ 2.02 $ 2.72 $ 6.00
Present Value @10%
$
(9.10) $ 2.11 $ 2.17 $ 2.04 $ 1.38 $ 1.69 $ 3.73
Net present value
$
4.01
The Net Present Value is Positive which means The outcome of this project is good
The project Gives Net benefit of $4 Million dollars

4. Quesiton NO 3
A Total Overhead 48000
Total Direct Labor 2400
Overhead rate 20
Job Quantity rate Amount
Direct Material 30 kg $ 7.0 $ 210.0
Direct Labor 15 hours $ 20.0 $ 300.0
Overhead 15 hours $ 20.0 $ 300.0
Total Cost $ 810.0
Desire profit $ 202.5
Selling price $ 1,012.5
B
Total Overhead 48000
Total Direct Labor 2400
Overhead rate 20
Job Quantity rate Amount
Direct Material 30 kg $ 7 $ 210
Direct Labor 17 hours $ 20 $ 340
Overhead 17 hours $ 20 $ 340
Total Cost $ 890
Sellingprice $ 1,013
Profit $ 123

5. PART B Question 1
CASH BUDGET
September
Cash Receipt
OpeningCash Balance $ 50,000
Sales (Cash) $ 2,564,100
Credit Sales (collection) $ 8,288,000
Total Cash Inflows $ 10,902,100
Cash Disbursement
Payment to A Supplier $ 2,100,000
Payment to B supplier $ 500,000
Direct Labor $ 3,360,000
Variable overhead $ 672,000
Fixed Overhead $ 650,000
Fixed sellingand admin $ 400,000
Purchase of new Equipment $ 3,800,000
Total Cash disbursement $ 11,482,000
Net Cash flow $ (579,900)

6. Analysis
B The sales volume of Nina plc is increasing therefore the sales
of September is 25% greater than previous month sale
The primary reason for increases sale increase in number of units
sold
The major cash outflow in September is due to purchase of new equipment
Due to increasing number of units sold the new equipment was needed
Recommendation
1
The company has to increase their cash Sales, 80% credit
sales is risky for business
2
Modify term of payment with supplier A, supplier A
should be paid after one or two months of purchase
In this way Nina plc can maintain good Cash flow
3 Avoid Unnecessary expense
4
Aware employees about cost saving techniques and
adopt inclusive behavior and motivate employees
5
The cash flow health of Nina plc is good, because of new
purchase we see negative cash flow
but in future it will be positive cash flow
6 Nina should continue increasing their sales