 Question 1

Don't use plagiarized sources. Get Your Custom Essay on
GET AN ESSAY WRITTEN FOR YOU FROM AS LOW AS \$13/PAGE
• When raw materials are received

ABC company limited produced mattresses for commercial use. They receive materials worthy \$2000. This transaction is recorded as follows:

 Debit Credit Raw materials inventory 2000 Accounts payable 2000

1. When raw materials are sent to the factory floor

XYZ releases materials worthy \$1500 to the manufacturing department. This transaction is recorded as;

 Debit Credit Work in progress 1500 Raw materials inventory 1500

1. Joy Interiors have completed printing wall decorations. The cost is \$1000 The transaction is recorded as;
 Debit Credit Finished goods 1000 Work in progress 1000

1. Overhead expenses(salaries) paid by cheque \$5,000
 Debit Credit Salaries 5000 Bank 5000

1. Utilities (indirect expenses) paid by cash \$1,000
 Debit Credit Utilities(indirect expenses) 1000 Cash 1000

1. Salaries totaling \$5,000 are accrued
 Debit Credit Direct labor 1750 Accrued expenses 1750

 Debit Credit Indirect labor 2000 Accrued expenses 2000

 Debit Credit Overhead expenses 1250 Accrued expenses 1250

 Debit Credit Direct labor 150% Work in progress 150%

 Debit Credit Overhead expenses 300% Work in progress 300%

Question 2

a)

Break-even point is the point where total costs=total revenue.

Total costs=Variable costs+Fixed costs

Revenue=Price per unit*N

In our question,

N=20000 units

Total cost=variable costs +Fixed costs

=225000+(30*20000)

=225000+60000

=825000

Selling price per unit=1000000/20000

=50

Break even point=225000/(50-30)

=11250 units

b)

After-tax income=1000000*70%

=\$ 700,000

c)

Number of units=100000/20

=5000 units

Question 3

DOL=Q(P-V)QP-V-F

DOL=8000(1000-400)80001000-400-850000

DOL=48000004800000-850000

=4800000/ 3950000

= 1.21519

This means that every 1% change in the Ahmed’s sales will change his operating income by 1.21519%