You are the chief financial analyst of Hercules Manufacturing Limited. The company manufactures bowls and has been planning to aggressively expand its sales into the Middle Eastern markets. You have been tasked to analyse its reports using CVP and provide explanations to the Director, Tierra Muller. The operating statement relating to the month ended September 30, 2019 of Hercules Manufacturing Limited is as follows:     $’000 $’000 Sales (22,000 units)   3,300 Direct materials 726   Direct labour 374   Production overheads 798   Total   1,898 Gross profit   1,402 Selling overheads   1,042 Net profit   360 The variable production overheads were $9 per unit while the variable selling overheads were $11 per unit. Required: Calculate the contribution…

Wattle Limited has two divisions: Industry and Consumer. The Industry Division transfers partially completed components to the Consumer Division at a predetermined transfer price. The Industry Division’s standard variable production cost per unit is $500. This division could sell all its components to outside buyers at $650 per unit in a perfectly competitive market. The Consumer Division has a special offer of $740 for its product. The Consumer Division incurs variable costs of $260 in addition to the transfer price for the Industry Division’s components. Both Industry and Consumer divisions currently have spare production capacity.   Required: Determine a transfer price using the general transfer pricing rule. Assume that the transfer price has been set at $530, is the Consumer Division…

North-South Pole Company produces two products, a jacket suitable for adventure-seeking people (Spirit) and a jacket for less-adventurous people (Companion). Production and Sales per year                               20,000 units (Spirit) & 5,000 units (Companion) Direct labour                                                                  3.5 hours per unit (both) Direct labour cost                                                         $32.00 per hour Estimated annual manufacturing overhead           $200,000 Direct materials                                                              $180 per unit (both)   Breakdown of overhead rates Activity Cost Pools Estimated Overhead Expected Use of Cost Drivers per Activity Activity Based Overhead Rates Machine set-up   $  40,000 200 $?  per set-up Sewing $135,000 37,500 machine hours (MH) $?  per MH Inspection   $  25,000 1000 $?  per inspection  …

Dream Limited manufactures ice cream. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. The company’s production quantity schedule for January is as follow: Unit (tubs) Work in process on 1 January (55% complete as to conversion)   8,000 Units started during January 11,000 Total units to account for 19,000     Units from beginning work in process, which were completed and   transferred out during January  8,000 Unit started and completed in January  6,000 Work in process on 31 January (35% complete as to conversion)  5,000 Total units to account for 19,000   Required: Calculate each of the…

Ola Ltd, which uses a job costing system, had two jobs in process at the start of the year: Job L1 ($68,000) and Job L2 ($30 000). The following information is available: i. The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and machine activity for the year were anticipated to be $1,000,000 and 25,000 hours, respectively. ii. The company worked on three jobs during the first quarter (i.e. from 1 January to 31 March). Direct materials used, direct labour incurred and machine hours consumed were as shown in the following table:   Job numbers Direct material Direct labour Machine hours L1 $15,000 $30,000    900 L2      - 33,000 1,600 L3 45,000 65,000 2,000    …

Following information relate to Hawke Ltd for the financial year ended 2020 Hawke Ltd Statement of Financial position As at 30 June 2020 2020 2019 Assets     Cash at bank 84200 100000 Accounts receivable 208000 172000 Inventory 200000 208000 Prepaid insurance 12000 20000 Interest receivable 400 600 Investments 80000 40000 Plant and equipment 800000 720000 Less: Accumulated depreciation -200000 -180000 Total assets 1184600 1080600 Liabilities     Accounts payable 152000 128000 Provision for employee benefits 24000 16000 Other expenses payable 8000 12000 Equity     Share capital 800000 800000 Retained earnings 200600 124600 Total liabilities and equity 1184600 1080600     Hawke Ltd Statement of Financial performance For the period ended 30 June 2020     2020 2019 Income  …

You want to buy a property valued at $1,200,000 and have arranged with the PB Bank for a 30 year mortgage equal to 90% of the sale price. The agreement calls for monthly repayments and the bank will charge 6% pa interest compounded monthly. If your first monthly payment is due one month after the loan is received, calculate the amount for your regular monthly payments. (Show answer correct to the nearer cent) After 5years (that is after the 60th payment) you want to refinance your mortgage with RH Bank. Assuming no exit fees, calculate the payout amount that is, the amount you have to pay PB bank to payout your mortgage. (Show answer correct to the nearer cent) The RH…

CIMB Bank pays its clients 5% interest per annum, compounded on a semi-annual basis. To remain competitive, the bank's major competitor, May Bank is willing to match the interest rate offered by CIMB Bank, but interest will be compounded on a quarterly basis. What nominal rate of interest must May Bank offer to its clients? (Show answer correct to four decimal points)

You have just borrowed $10,000. You are required to repay equal amounts at the end of each of 7 years, with the first payment starting in four years' time. Your interest rate is 8% per annum. How much will be the amount of each payment? (Show answer correct to the nearer cent)