Draw a Cost-Volume-Profit Graph Showing Total Revenue - Accounting Assignment Help

Assignment Task :

QUESTION 1

Budget Mowing manufactures a low cost ride-on lawnmower for the Australian market, the  Quickmow. Current annual sales are 600 mowers and they sell for $1,000 each. Staff salaries  are $101,000 per annum and the manufacturing shed rental and other overheads such as air  conditioning are $19,000 per annum. On average parts for a mower cost $500 and other  variable costs of manufacture are $100 per mower. 

Required: 

1. What is the contribution margin per mower sold?  

2. How many mowers need to be sold per year to break-even?

3. Given current annual sales, what would the annual profit/loss be?  

4. Draw a Cost-Volume-Profit graph showing total revenue and total costs, fixed costs,  

profit and loss areas, and clearly showing the break-even point in units and dollar  revenue similar to Exhibit 2.12 page 69 of the set text.  

5. The owner of Budget Mowing is considering spending $20,000 on an advertising  campaign for the year which it is expected will increase sales by 55 mowers. Is the  additional spending worthwhile (show calculations to support your answer)? 

QUESTION 2

Pater’s Paints expects the following sales in units in the last quarter (Oct-Dec) of 2020: Oct 44,000; Nov 58,000; Dec 66,000 and 60,000 for January 2021. The business has  inventory of 8,800 finished units on hand at 1st October and has a target finished inventory of  20% of the following month’s sales units. The units are purchased for $15 and sold for $35 each. Payment for purchases is made in the month following purchase. Accounts payable for  purchases as at 30 September was $612,000. 

Required: 

1. Prepare the sales budget for the quarter October – December 2020 (showing each month  and the total for the quarter) (see format p. 106 Exhibit 3.6 the first 3 lines only). You do not need to prepare/include the cash/credit sales split or the schedule of expected cash  collections.  

2. Prepare the purchases budget for the quarter October – December 2020 (showing each  month and the total for the quarter) (see format p.110 Exhibit 3.10) You do need to include  the expected payments for purchases.

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