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  • Resource For Question 4 - Parts (B), (C) and (D) - Data For Parts (B) and (C)

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    Aung Zaw Htwe
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    Hirarra manufactures 5,000 units per month with total costs of $10,000 for direct materials, $12,000 for direct labor, and $7,500 for fixed overheads. In September they sold 4,000 units and in October 6,000 units at $8 per unit. Hirarra is considering buying another business and provided financial ratios for Business A (20% gross profit, 10% profit on revenue, 1.7 current ratio, 1 quick ratio) and Business B (25% gross profit, 12% profit on revenue, 2 current ratio, 0.8 quick ratio).

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    Hirarra manufactures 5,000 units per month with total costs of $10,000 for direct materials, $12,000 for direct labor, and $7,500 for fixed overheads. In September they sold 4,000 units and in October 6,000 units at $8 per unit. Hirarra is considering buying another business and provided financial ratios for Business A (20% gross profit, 10% profit on revenue, 1.7 current ratio, 1 quick ratio) and Business B (25% gross profit, 12% profit on revenue, 2 current ratio, 0.8 quick ratio).

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    Resource For Question 4 - Parts (B), (C) and (D) - Data For Parts (B) and (C)

    Uploaded by

    Aung Zaw Htwe
    Hirarra manufactures 5,000 units per month with total costs of $10,000 for direct materials, $12,000 for direct labor, and $7,500 for fixed overheads. In September they sold 4,000 units and in October 6,000 units at $8 per unit. Hirarra is considering buying another business and provided financial ratios for Business A (20% gross profit, 10% profit on revenue, 1.7 current ratio, 1 quick ratio) and Business B (25% gross profit, 12% profit on revenue, 2 current ratio, 0.8 quick ratio).

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    © All Rights Reserved
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    Resource for Question 4 – Parts (b), (c) and (d).

    Data for parts (b) and (c).


    On 1 September 2018 Hirarra started manufacturing goods.
    The business manufactures 5 000 units every month.

    Total costs $

    Direct materials 10 000

    Direct labour 12 000

    Fixed overheads 7 500

    During September 2018 Hirarra sold 4 000 units, and in October 2018 6 000 units, at a
    selling price of $8 per unit.
    Data for part (d).
    Hirarra is considering buying another manufacturing business to expand his business
    and has obtained the following information.

    Ratio Business A Business B

    Gross profit percentage/margin 20% 25%

    Profit for the year as a percentage of revenue 10% 12%

    Current ratio 1.7:1 2:1

    Quick ratio (acid test) 1:1 0.8:1

    6
    P59884A

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