2013 December - Cost sheet

Direct material, opening inventory -

Purchase 140,000
Direct material, closing inventory (1,386)
Direct material consumed 138,614
Direct manufacturing labour cost 30,000
Prime cost 168,614
Factory overhead:
Plant energy cost 5,000
Indirect manufacturing labour cost (V) 10,000
Indirect manufacturing labour cost (F) 16,000
Other indirect manufacturing labour cost (V) 8,000
Other indirect manufacturing labour cost (F) 24,000
Total manufacturing cost 207,614
WIP, opening inventory -
WIP, closing inventory -
Cost of goods manufactured 207,614
FG, opening inventory -
Cost of goods available for sale 207,614
FG, closing inventory (20,970)
Cost of goods sold 186,644
Income statement
Revenue 436,800
COGS (186,644)
GP 250,156
Distribution cost (162,850)
Administrative cost (50,000)
Net Operating Income 37,306

Total units produced = 100,000

RM required (100,000*2) 200,000
RM closing inventory 2,000
Direct material inventory cost = 140000/202000*2000 = 1386

Total variable manufacturing cost 167,614

Total units produced 100,000
Per unit manufacturing cost 1.68
FG, closing inventory cost 20,970
FG, closing inventory units 12511

Units sold (100,000-12,511) 87,489

Sales revenue 436,800
Unit selling price 5

2013 June - 8 (b)

Year CFBT Annual Profit Tax @ 35% Cash flow Cumulative Discount Present
Depreciation before tax after tax Cash flow factor Value
0 (500,000) - - - (500,000) (500,000) 1.000 (500,000)
1 100,000 90,000 10,000 3,500 96,500 (403,500) 0.870 83,955
2 150,000 90,000 60,000 21,000 129,000 (274,500) 0.756 97,524
3 200,000 90,000 110,000 38,500 161,500 (113,000) 0.658 106,267
4 225,000 90,000 135,000 47,250 177,750 64,750 0.572 101,673
5 350,000 90,000 260,000 91,000 259,000 323,750 0.497 128,723
Net present value 18,142

Payback period = 3 years + (113,000 / 177,750) years = 3 years 7 months 19 days

NPV = BDT 18,142

96,500 + 129,000 + 161,500 + 177,750 + 259,000

Profitability index = = 1.04
500,000

Comment: The invested money is expected to be returned within 3 years 7 months 19 days and the project has a positive NPV for the entire life which results in PI more
than 1. So, the project can be taken up.

2013 June - 3 (b)

(i) Variable expense per unit = 40 - (40 × 30%) = 28

(ii) BEP :
In units = 180,000 / (40 - 28) = 15,000 units
In sales = 180,000 / 30% = Tk. 600,000

(iii) Required sales level :

In units = (180,000 + 60,000) / (40 - 28) = 20,000 units
In sales = (180,000 + 60,000) / 30% = Tk. 800,000

(iv) BEP :
In units = 180,000 / (40 - 24) = 11,250 units
New CM ratio = 16 / 40 = 40%
In sales = 180,000 / 40% = Tk. 450,000
2013 June - 2 (b)

Income Statement

Total amount Unit cost

Sales revenue 2,520,000

Less: Cost of goods sold
Direct material, opening inventory 200,000
Purchase 675,000
Direct material, closing inventory (160,000)
Direct material consumed 715,000
Freight in 1,000
Direct manufacturing labour cost 240,000
Prime cost 956,000
Factory overhead 191,200
Total manufacturing cost 1,147,200 458.88
WIP, opening inventory -
WIP, closing inventory -
Cost of goods manufactured 1,147,200 458.88
FG, opening inventory 210,000
Cost of goods available for sale 1,357,200
FG, closing inventory (321,216)
Cost of goods sold (1,035,984) 493.33

Gross profit 1,484,016 706.67

Less: Administrative expenses (6,000)
Selling expenses (12,000)
Net profit 1,466,016 698.10

2013 June - 5 (b)

Cash budget

January February March Total

Cash receipts:
From sales 16,000 24,000 27,000 67,000
From trade receivables 30,000 18,000 22,000 70,000
46,000 42,000 49,000 137,000

Cash payments:
Trade creditors 14,000 33,000 36,000 83,000
Accrued sales commission 3,500 - - 3,500
Fixed cost 3,000 3,000 3,000 9,000
20,500 36,000 39,000 95,500

Receipt over payments 25,500 6,000 10,000 41,500

Opening cash balance 7,500 33,000 39,000 7,500
Closing cash balance 33,000 39,000 49,000 49,000