ASSIGNMENT

Submitted to:

Ms. Faieza Chowdhury

Lecturer,
Southeast Business School (SBS),
Southeast University.

Submitted by:
Md. Shaidur Jaman
2019010000112
Section: 3
Course code: ACT201
 Part A: Problem Solving
Answer-1(i).
Samuel Ltd.
Income Statement
For the month ended…..
Accounts Name $$$ $$$
Sales……………………………………………………. 800,000
Variable expenses:
Cost of goods sold……………………………………... 316,000
Administrative expense (800000*5%)………………… 40000
Freight out (2000*15)…………………………………. 30000
Heating (30000*1⁄3)……………………………………. 10000
Selling expenses (2000*2)……………………………. 4000
Contribution margin (400,000)
400,000
Fixed expenses:
Administrative expenses……………………………….. 2000
Heating (30000*2/3)…………………………………… 20000
Selling expenses……………………………………….. 3000
Depreciation……………………………………………. 2000
(27000)
Net income 373,000

Answer-1(ii).
A company may need to prepare a contribution format income statement because-
1. The Contribution Margin Income Statement format has fixed expenses as a part of
overhead costs instead of production costs. To explain it in a better way, fixed expenses
incur even if the sales volumes go up or down.
2. All we need to do is deduct the variable expenses from revenue, which would give
contribution margin as a result. From the contribution margin, when we deduct all fixed
expenses, it concludes to Net Profit or Net Loss.
3. It cannot be used for Generally Accepted Accounting Principles (GAAP) statements
and is used by managers internally. This format is handy in decision making. It helps
in understanding the cost behavior by separating the fixed and variable expenses.
Answer-2

1. Variable Cost per unit:-

High activity > January : 1900 15200 tk

Low activity > April : 1100 12800 tk
800 2400 tk

∆ in cost
VC / Unit =
∆ in activity

2400
=
800

= 3/days

Fixed cost = total cost – total V.C

= 15200 – (3*1900)
= 9500

2. A linear cost formula:

Y= a+bx
= 9500+3x
 Part B: Short Case Study

Answer:
Option A

Accounts name Tk Tk Tk

Sales 150000 3000 210000 (70*3000)

Variable expense 40000 800 56000(70*800)

Contribution margin
110000 2200 154000

Fixed expenses 15000 (15000+10000)=25000

Net profit 95000 129000

Option B

Accounts name Tk Tk Tk

Sales 150000 3000 200000 (80*2500)

Variable expense 40000 800 64000(80*800)

Contribution margin
110000 2200 136000

Fixed expenses 15000 15000

Net profit 95000 121000

As a sensible manager I want to choose option “A” to maximize the profits for
camera brand.