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Financial Analysis of Pacific Telemat Ltd. and Special Order Decision Making

   

Added on  2023-04-23

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ACCOUNTING FOR MANAGERS
Financial Analysis of Pacific Telemat Ltd. and Special Order Decision Making_1
Solution 1.
The data that is provided in these tables below relates to Pacific Telemat Ltd. whose principle
business activity is to manufacture smart phones with dual sim cards. The following tables give
us financial information of the company of the last year (Atkinson, 2012).
The profit calculations under various alternatives are shown in the table provided below:
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
55,20,0
00
Less:
Variable manufacturing cost
22,08,0
00
Fixed manufacturing costs
3,60,0
00
Variable selling and administrative 4,32,0
Financial Analysis of Pacific Telemat Ltd. and Special Order Decision Making_2
costs 00
Fixed selling and administrative costs
6,00,0
00
Profit/Loss
19,20,0
00
Alternative 1:
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
Fixed selling and administrative costs
6,00,0
00
Advertisement charges
60,0
00
Profit statement
Particulars Amount
Sales
71,76,0
00
Less:
Variable manufacturing cost
34,32,0
00
Financial Analysis of Pacific Telemat Ltd. and Special Order Decision Making_3
Fixed manufacturing costs
3,60,0
00
Variable selling and administrative
costs
5,61,6
00
Fixed selling and administrative costs
6,00,0
00
Advertisement charges
60,0
00
Profit/Loss
21,62,4
00
In this alternative, the management of the company decided to spend $60000 on advertisement
and also it estimated an increase of variable cost by $36 per unit. This resulted in overall extra
profits of $242000.
Alternative 2:
Proposal by Kristen Arnold
Sales
10,5
60
Selling price
5
20
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
Advertisement charges
1,20,0
00
Financial Analysis of Pacific Telemat Ltd. and Special Order Decision Making_4

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