Particulars

Computatio
n for
current
year
(90,000
units)

Sales

Computati
on for
projected
year
(99,000
units)

2,250,00
0

Less: variable costs

-direct materials
-direct labor
-manufacturing expenses
-Administrative expenses
-Selling expenses

Contribution
Less: Fixed costs
-manufacturing expenses
-Administrative expenses
-Selling expenses

Current
year

70%(378,00
0)
20%(270,00
0)
40%(250,00
0)

2,475,000

(1,131,4
00)
(250,000
)
(264,600
)
(54,000)

99,000*12.5
711
99,000*2.77
77
99,000*2.94

(1,244,539)

99,000*0.6

(59,400)

(100,000
)

99,000*1.11
11

(110,000)

450,000
30%(378,00
0)
80%(270,00
0)
60%(250,00
0)

Profit/(loss)

Projected
year

(113,400
)
(216,000
)
(150,000
)

(274,992)
(291,060)

495,009
30%(378,00
0)
80%(270,00
0)
60%(250,00
0)

(29,400)

(113,400)
(216,000)
(150,000)

15,609

Present year unit sales = 90,000

Projected unit sales
Selling price

= 99,000 (10% increase)

= 2,250,000/90,000 = $25

Calculation of variable cost per unit

Particulars
Amount
-direct materials

Computation
($)
1131400/90000

12.5711

-direct labor

250000/90000

-manufacturing expenses

2.7777

264,600/90000

-Administrative expenses

54000/90000

-Selling expenses

100,000/90000

Total

2.94

0.6
1.1111

20

Calculation of Break even point for first year

Break even point in units = fixed cost/contribution per unit = 479,400/ (25-20) =
95,880
Break even point in amount = Break even units * selling = 95,880*25 = 2,397,000
PVratio = contribution/sales = 450,000/2,250,000 = 20%

Target Income
Target Income

= $190,000

Add: Fixed cost

=$479,400

Contribution to be earned
PV ratio
Sales =

=$669,400
= 20%

669,400/20%

=$3,347,000

Allocation of partnership income

Particulars
Stolton
Net Income
--Salary allowances
$11,600
Balance Income
--To be shared equally
$8,400
Balance of income
-Total share of partners
$20,000
Journal entries for investment in partnership

Bright
Total
$52,500
$24,100
($35,700)
-$16,800
$8,400 ($16,800)
--0
$32,500 ----

Entries in whom books to be made is not clear in que. Entries have been recorded in
the books of partnership firm.
Particulars
-for Mosss Investment
Cash a/c
Dr.
Equipment a/c Dr.
To Mosss capital a/c
$92,000
Mosss capital a/c Dr.
To note payable a/c
$18,000
-for Barbers Investment
Cash a/c
Dr.
To Barbers capital a/c

Dr.

Cr.

$21,000
$71,000

$18,000

$37,000
$37,000

Journal entries for Kwon admission in partnership

Cash a/c

Dr.
To Kwons capital a/c

$28,800
$28,800

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