The board of directors of Performance Ltd appointed a new manager to the Southern division of the
Question:
The board of directors of Performance Ltd appointed a new manager to the Southern division of the company at the start of year 6. The expectation was that the manager would improve the gross profit as a percentage of sales, as compared with the results for year 4 and year 5.
Relevant information in respect of the Southern division for each year is as follows:
1. Sales and costs of the division were as follows:
Transcribed Image Text:
Sales Production Variable cost of production Variable cost of selling Total fixed costs of production per annum Year 4 10,000 units 9,000 units 5.00 per unit 2.00 per unit 210,000 Year 5 11,000 units 10,000 units 6.00 per unit 2.20 per unit 230,000 Year 6 12,000 units 15,000 units 7.00 per unit 2.40 per unit 390,000 2. Selling prices each year were based on full unit cost plus a percentage mark-up on cost: Year 4: Full unit cost plus 25 per cent of cost Year 5: Full unit cost plus 24 per cent of cost Year 6: Full unit cost plus 20 per cent of cost 3. There were 4,000 units of finished goods in stock at the start of Year 4. These were valued using costs identical to those incurred during Year 4. 4. The company policy is to value inventories (stocks) on a FIFO basis. In year 4 and year 5 the company followed its previous practice of valuing inventories (stocks) at variable cost of production for management accounting purposes. The new manager of Southern division has insisted quite strongly that the inventories (stocks) should be valued on a full absorption costing basis, for consistency with external reporting standards. Required Prepare a report to the board of directors of Performance Ltd showing how the profit perform- ance of the Southern division in Year 6 compares with that of Year 5 and Year 4 respectively.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 50% (2 reviews)
To prepare a report for the board of directors of Performance Ltd we need to calculate the profit performance of the Southern division in Year 6 and c...View the full answer
Answered By
Ann Wangechi
hey, there, paying attention to detail is one of my strong points, i do my very best combined with passion. i enjoy researching since the net is one of my favorite places to be and to learn. i am a proficient and versatile blog, article academic and research writing i possess excellent English writing skills, great proof-reading. i am a good communicator and always provide feedback in real time. i'm experienced in the writing field, competent in computing, essays, accounting and research work and also as a Database and Systems Administrator
4.90+
151+ Reviews
291+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Subject : Strategic Management in a Global Environment Safaricom: Innovative Telecom Solutions to Empower Kenyans As the largest mobile provider in Kenya, Safaricom has touched the lives of Kenyans...
-
The minutes of the board of directors of the Meeting of March 5, 2011 The meeting of the board of directors of Tetonic Metals was called to order by the James Cook, chairman of the board, at 8:30 am....
-
Marc & Kent operate a vineyard as partners. The partnership trades under the business name Victor Estate. Victor Estate has prepared a general ledger for the 2023 income year showing the following...
-
The Moon revolves around the Earth. Model its orbit as circular. Is the Moons linear momentum conserved? Is its kinetic energy conserved?
-
Assume that you conduct a relative value trade and close it out after 3 5 days. Your 3 3 - day return is 0 . 7 5 % . Annualize this return as a Bond Equivalent Yield ( BEY ) . Assume that a year has...
-
What is transpiration? How does transpiration drive the movement of water up the xylem?
-
Packard Company has the following opening account balances in its general and subsidiary ledgers on January 1 and uses the periodic inventory system. All accounts have normal debit and credit...
-
If f ( x ) = x 2 5 x 4 , find f ( a + h ) f ( a ) . ( Simplify your answer completely. )
-
This extract from a newspaper article discusses the full cost of absorbing operating costs. TRANSPORT group Go-Ahead expects a hit to profits from its bus business after failing to recover 2.5m of...
-
Playtime Ltd produces jigsaws for sale in model shops. The following information relates to the sales and costs of producing the jigsaws. Selling price per unit is 20 Variable cost per unit is 10...
-
Suppose the text file on the Web http://liveexample.pearsoncmg.com/data/Scores.txt contains an unspecified number of scores separated by spaces. Write a program that reads the scores from the file...
-
Discuss the mechanisms and algorithms employed in disk scheduling within operating systems to optimize I/O performance. How do approaches like FCFS (First-Come, First-Served), SSTF (Shortest Seek...
-
Explain what is meant by internal and external environments. Provide examples by Opsens company.
-
Over 7 years ago your company built a restaurant in New London, Connecticut. It was completed in 2016 with a total cost of $4,940,000. You were awarded a contract for a similar restaurant (almost...
-
Assume a 10% discount rate. Which among the choices below have the highest value, A or B, if any? Show work. A.$1,000 per year for perpetuity (first payment at the end of the first period). B.$10,000...
-
Consider the ultimatum game: The proposer offers a split of $10 between himself and the respondent. The proposer can choose any split (x, 10 x), where x [0, 10] is the amount the respondent gets...
-
Implementation of a new AIS went smoothly, for the most part. It is 15 years later, and now HMC is interested in mapping a variety of their business processes to determine whether improvements can be...
-
Juanita owns a home in Richardson, TX. She purchases a Homeowners Policy (HO-3) from Farm State Ins. Co. The policy provides $100,000 in liability coverage (coverage E) and $5,000 in Med Pay coverage...
-
Explain what is meant by each of the following: (a) Freedom from error (b) Neutrality; (c) Completeness;
-
Explain what is meant by each of the following: (a) Comparability; (b) Understandability; and (c) Materiality?
-
Explain the accounting principles of each of the following: (a) Going concern; (b) Accruals; (c) Consistency; (d) The concept of prudence?
-
How important do you suppose control is for the average stockholders of a firm whose shares are traded in the Philippine Stock Exchange?
-
Discuss how managing liquidity fits into your financial plan. What is the liquidity trade-off? How can you protect your assets and income? What is the insurance trade-off? How does time affect your...
-
Problem 3-20 (Algo) Calculate profitability and liquidity measures LO 3-3, 3-4, 3-6 Presented here are the comparative balance sheets of Hames Incorporated at December 31, 2023 and 2022. Sales for...
Study smarter with the SolutionInn App