Financial Management Accounting Online Exam

FINANCIAL
MANAGEMENT
ACCOUNTING[ONLINE
EXAM]

Table of Contents
Question 1.............................................................................................................................................3
Gross and net profit...........................................................................................................................3
Gross and net profit ratio...................................................................................................................3
Reason behind declining profit and increasing cash flow problems...................................................4
Strategic recommendations................................................................................................................4
Question 2.............................................................................................................................................4
Breakeven point of production..........................................................................................................4
Company to set profitable sales revenue target..................................................................................5
Switch to activity based costing.........................................................................................................5
Question 3.............................................................................................................................................6
Calculation of three significant variance............................................................................................6
Possible causes of variance................................................................................................................6
Projection of likely consequences of business...................................................................................6
Strategies for eliminating or correlation of these variances...............................................................6
Advantages and disadvantages of switching from incremental based budgeting to zero based
budgeting...........................................................................................................................................6
REFERENCES......................................................................................................................................8

Question 1
Gross and net profit
Particular 2020 2019
Sales 365000 530000
Less:
Cost of sales (128000) (230000)
Gross profit 237000 300000
Less
Labour cost (110000) (100000)
Warehousing cost (30000) (10000)
Other overhead cost (70000) (80000)
Net profit 27000 110000
Gross and net profit ratio
Gross profit ratio:
Gross profit / sales * 100
2020
= 237000 / 365000 * 100
= 64.93%
2019
= 300000 / 530000 * 100
= 56.60%
Net profit ratio:
Net profit / sales * 100
2020
= 27000 / 365000 * 100
= 7.40%