Accounting for Managers - Solutions and Special Orders

ACCOUNTING FOR MANAGERS

Contents
Solution 1:...................................................................................................................................................2
Solution 2:...................................................................................................................................................8
Bibliography...............................................................................................................................................11

Solution 1:
The table provided below provides financial information of Pacific Telemat Ltd. That is engaged
in the manufacturing of smart phones with dual sim cards. The financial information relates to
last year and the profit that has been calculated is under the current situation (Atkinson, 2012).
Financial data from last year
Sales
12,0
00
Selling price
4
60
Variable manufacturing cost
1
84
Fixed manufacturing costs
3,60,0
00
Variable selling and administrative
costs 36
Fixed selling and administrative costs
6,00,0
00
Profit statement (under current circumstances)
Particulars Amount
Sales (12000*460)
55,20,0
00
Less:
Variable manufacturing cost
(12000*184)
22,08,0
00
Fixed manufacturing costs
3,60,0
00
Variable selling and administrative
costs (12000*36)
4,32,0
00

Fixed selling and administrative costs
6,00,0
00
Profit/Loss (Sales-cost)
19,20,0
00
The profit has been calculated by subtracting all the costs from revenue. The total costs include
both manufacturing and selling costs (fixed as well as variable). The revenue amounts to
5520000 and the total costs amounts to 3600000. The profit earned was (5520000-3600000)
=1920000.
The tables provided below shows us the calculation of profits under various alternatives.
Under all the alternatives, the profit is calculated in the similar manner i.e Sales- Variable
manufacturing cost- Fixed manufacturing cost – Variable selling and administration costs –
Fixed selling and administration costs = Profit
Alternative 1:
The profits under this alternative are higher than what was expected. The company has incurred
an additional expenditure of $60000 in relation to advertisement and $36 per unit in relation to
variable costs that would help to generate an additional profit of $242400 (Berry, 2009).
Proposal by David Groate
Sales
15,6
00
Selling price
4
60
Variable manufacturing cost
2
20
Fixed manufacturing costs
3,60,0
00
Variable selling and administrative
costs 36