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on introduction finance and accounting - Essay Example

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Summary

Date 1. The assumptions used to produce the key financial figures are varied and they are to ensure that the financial data used are realistic and reliable by the users of the financial information. The assumptions include the following:- That the cost of sales figures to be used in the calculations is 45% of the identified sales figure…

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on introduction finance and accounting

That for the energy drink, the net profit value as a percentage of sales is estimated at between 12% to 18%. That the fixed cost will be estimated as the difference of the gross profit and the net profit figures That the direct costs; both for materials and labor is estimated at between 22% to 27% of the sales figure. 2. Assuming the drink being produced is of the 250ml packet in a bottle type of packaging. Assuming the number of units of the drink produced is 6000 units, the variable cost per unit is provided as follows: - direct materials $2, direct labor $4, variable manufacturing overhead $1, variable selling and administration expenses $3. The fixed costs of the product per annum are estimated as follows; fixed manufacturing overhead $30,000 and fixed selling and administration is $10,000. The selling price per unit produced is estimated as $15. The marginal costing statement will appear as follows: Product cost per unit Direct materials $2 Direct labor $4 Variable manufacturing overhead $1 Product cost per unit $7 The variable costs for the production of the drink for the 6000 units will be 6000*$7 = $42000. ...
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