Accounting Exam: Cash Flow Statement, Income Statement, and Financial Position Analysis

Examination Answer Book – ACC10032122
2ndResit
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Examiner’s signature
Page 1 of 10

1a
1b
b. Dropping sales of
Cheese Cake
£
Contribution from Strawberry
cake 180000
Contribution from Mixed Fruits 150000
Contribution from Mixed Nut 150000
Total contribution 480000
Minus Fixed Costs 40000
Profit 440000
1c
With the evaluation of the results of A and B it can be stated that dropping of cheesecake from the
production will make a very minor changes. This is particularly because of the reason that when the
cheesecake was produced at that time the total profit was 445000. On the other hand on evaluation of the
Page 2 of 10
a.
£ £ £ £ £
Strawberry
Cakes
Mixed
Fruits
Cake
Mixed
Nuts
Cake
Cheeses
Cake Total
Total costs
70,000 60,0
00
50,0
00
40,000 220,00
0
Variable costs 60000 50000 40000 30000 180000
Fixed Costs 10000 10000 10000 10000 40000
Sales
240,000 200,0
00
190,0
00
35,000 665,00
0
Minus Variable Costs 60000 50000 40000 30000 180000
Contribution 180000
15000
0
15000
0 5000 485000
Minus Fixed Costs 40000
Profit 445000

data after dropping the sales of cheesecake the profit was 440000. There is only a variation of 5000
reduction of the profit which is not good for the company. On the basis of the financial information and
analysis it is recommended to the company that they must not drop of the sales and production of
cheesecake. This is particularly because when the sales are dropped then the profit of the company has
reduced to 440000 which was earlier 445000. On the other hand it is recommended to the company that
they must start promoting the product cheesecake so that the sales of the company might increase.
1d
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