Khalid is a salt merchant who supplies salt to general merchants in Lahore city. In the year of 2020 he sold 35,000 bags of salt. One bag consists of 50kg salt. He purchases slat in raw form and then grinds it, fills it in bags and then sold it, Sale price per bag is RM 45. He purchases the raw salt @ RM 400 per ton (1 ton consist of 1000 kg). Grinding cost is RM7 per bag, carriage outward cost is RM 5 per bag, he also purchases empty bags @ RM400 per 100 bags. Rent of shop RM1500 per month. Electricity and phone expense is RM16,000 per year (assume fixed). Depreciation of plant is RM3,680 per year. In the year 2021 it is expected that sale price and demand will remain the same but all the variable costs will increased by 15%. All the fixed costs will also increase by 10%. Required: 1. Break-even point in units and RM in both year. 2. Income statements of both year. 3. If he wants to earn RM 350,000 in the year of 2021 how many bags he has to sell.

Khalid is a salt merchant who supplies salt to general merchants in Lahore city. In the year of 2020 he sold 35,000 bags of salt. One bag consists of 50kg salt. He purchases slat in raw form and then grinds it, fills it in bags and then sold it, Sale price per bag is RM 45. He purchases the raw salt @ RM 400 per ton (1 ton consist of 1000 kg). Grinding cost is RM7 per bag, carriage outward cost is RM 5 per bag, he also purchases empty bags @ RM400 per 100 bags. Rent of shop RM1500 per month. Electricity and phone expense is RM16,000 per year (assume fixed). Depreciation of plant is RM3,680 per year. In the year 2021 it is expected that sale price and demand will remain the same but all the variable costs will increased by 15%. All the fixed costs will also increase by 10%. Required: 1. Break-even point in units and RM in both year. 2. Income statements of both year. 3. If he wants to earn RM 350,000 in the year of 2021 how many bags he has to sell.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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