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PRESENTATION

ON
MANAGERIAL ACCOUNT

BY
ID-1406065
ID- 1406067
ID- 1406071
ID- 1406073
ID- 1406079

Dobojit Chakama
Md. Shahadat Hossain
Md Saiful Islam
Md Mustafizur Rahman
A B M Khaled Haider
1

Assignment
• Memofax, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company’s contribution format: • Income statement for the most recent month is given below:
 Sales (13,500 units at $20 per unit) . . . .... $270,000
 Variable expenses . . . . . . . . . . . . . . . . . . . . 189,000
 Contribution margin . . . . . . . . . . . . . . . . . . . 81,000
 Fixed expenses . . . . . . . . . . . . . . . . . . . . . … 90,000
 Net operating …show more content…

What will the new contribution format income statement look like if these changes are adopted?
Solution
3. Sales (27,000 units × $18 per unit*)………………
Less variable expenses

$486,000 378,000

(27,000 units × $14 per unit)………………………
*$20 – ($20 × 0.10) = $18
Contribution margin………………………………..

Less fixed expenses ($90,000 + $35,000)………
Net operating loss………………………………….

125,000
$(17,000)

108,000

9

Requirement- 4: Refer to the original data. The company’s advertising agency thinks that a new package would help sales. The new package being proposed would increase packaging costs by $0.60 per unit.
Assuming no other changes, how many units would have to be sold each month to earn a profit of $4,500?
Solution

Sales
$ 20Q
$5.40Q
Q
Q

=
=
=
=
=

Variable expenses + Fixed expenses + Profits
$14.60Q* + $90,000 + $4,500
$94,500
$94,500 ÷ $5.40 per unit
17,500 units

*$14.00 + $0.60 = $14.60.

10

Alternative Solution :
Unit sales to attain
Fixed expenses + Target profit
=
target profit
CM per unit
=

$90,000 + $4,500

$5.40 per unit**

= 17,500 units
** $6.00 - $0.60 = $5.40.

11

Requirement- 5: Refer to the original data. By automating, the company could slash its variable expenses in half. However, fixed costs would increase by $118,000 per month.
a. Compute the new CM ratio and the new break-even both units and dollars.

point in

Solution:
The new CM ratio would be:

12

The new break-even point would be :
Break-even point

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