BUSN9117:  Neutron Food Products Produces Two Different Types of Snack Bar - Accounting Assignment Help

Assignment Task:

Task:

QUESTION ONE

 Neutron Food Products produces two different types of snack bar: Granola bars and carob bars. Neutron sells these bars by the case to local retail outlets. Granola bars sell for $30 a case whereas carob bars sell for $20 a case. The projected income statement for the coming three months is as follows: Neutron Food Products Projected Income Statement For the Quarter Ended 31 March 20X3 Sales $ 600,000 Less: Variable costs 400,000 Contribution margin 200,000 Less: Fixed costs 120,000 Net income $ 80,000 Neutron’s owner-manager expects granola bars to generate 60 per cent of the projected sales revenue. Carob bars will account for the remaining 40 per cent. Granola bars will also be responsible for 60 per cent of the variable costs incurred. All of the fixed costs are common to both products.

Required:

(a) How many cases of granola bars does the Neutron Food Products expect to sell during the quarter? 1 mark

(b) How many cases of carob bars does Neutron Food Products expect to sell during the quarter? 1 mark

(c) Compute the contribution margin per case for granola bars and the contribution margin per case for carob bars. 2 marks

(d) How many cases of granola bars and how many cases of carob bars must Neutron Food Product sell during the quarter ended 31 March 20X3 to break even? 8 marks (e) Express the margin of safety in cases of granola and carob bars sold, dollar sales revenue and as a percentage. 3 marks

(f) Compute Neutron Food Product’s magnitude of operating advantage. Assume actual sales revenue for the coming quarter will be 20 per cent higher than the projected sales revenue. By what percentage will profits increase given this increase in sales? 3 marks 3

QUESTION TWO

 Anthea’s Tyre Warehouse carries a variety of tyres including a popular brand of monster truck tyre. The 20X1 sales budget for this monster truck tyre appears below: Projected Unit Sales Projected Dollar Sales January 160 $19,200 February 180 21,600 March 120 14,400 April 80 9,600 May 200 24,000 June 260 31,200 July 240 28,000 August 250 30,000 September 200 24,000 October 90 10,800 November 100 12,000 December 180 21,600 Anthea believes inventory at the end of the month should equal 30 per cent of the following month’s projected sales. However, Anthea’s Tyre Warehouse held 84 monster truck tyres in inventory on January 1st 20X1 due to unexpectedly poor sales in December 20X0. Anthea prices monster truck tyres at 50 per cent above their cost. Required Prepare an inventory purchases budget (showing units purchased and dollar cost) for the first six months of 20X1.

QUESTION THREE

 Grange Retailers Limited’s financial year ends on 30 June each year. The financial controller of Grange Retailers Limited has assembled the following data to assist in the preparation of a cash budget for the third quarter of the 20X1-20X2 financial year. i. Sales (20X1-20X2) Month Actual or estimated Sales November (actual) $100,000 December (actual) 120,000 January (estimated) $90,000 February (estimated) 100,000 March (estimated) 135,000 April (estimated) 110,000

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