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THE UNIVERSITY OF AUCKLAND
Summer School, 2019
Campus: City
ACCOUNTING
ACCTG 101 – Accounting Information
Due date: 11 am Thursday 7 February 2019
LAST NAME STUDENT AUID
FIRST NAMES
QUESTION TOPIC MARKS
1 Cost-Volume-Profit 15
2 Cash Budgeting 10
3 Inventory Purchase Budgeting 5
4 Costing System 20
50
NOTE
1. This assignment counts for 5% of the final grade. There is no Plussage.
2. Attempt ALL questions.
3. Fill out your personal details on this page (Page 1).
4. Answers should beprovided in a clear and concise manner demonstrating a high
standard of communication skills. Type answers into the corresponding boxes. DO
NOT EXTEND THE BOXES MORE THAN THE NUMBER OF LINES
INDICATED.
5. Type your answers using Verdana 10 Font. No hand written answers will be
accepted.
6. Present numerical work clearly and concisely. Show your workings, as they will be
graded. Full marks will be given only where a solution is supported by clearly labelled
workings.
7. See details on submission of this booklet on the last pageof the assignment
question file.
YOU MUST SUBMIT THIS BOOKLET ELECTRONICALLY in pdf format.
CONTINUED

ASSIGNMENT 03
SS19
ANSWER BOOKLET ACCTG 101
Page 2 of 13

ASSIGNMENT 03
SS19
ANSWER BOOKLET ACCTG 101
1. Cost-Volume-Profit: 15 marks
(a)
Variable Cost = ($52500-$41250)/(150-105) = $11250/45 units = $250
Fixed Cost : Let us say the fixed cost be X then,
As per formula:
total cost = variable cost +fixed cost
$52500= ($250*150)+X
X = $15000
(b) Breakeven formula (in Units) = Fixed Cost/ Contribution per unit
Contribution per unit = Sales per unit less variable price per unit
Contribution per unit = $450-$250 =$200
Fixed cost per month = $15000
Breakeven units per month = $15000/$200 = 75 units per month
(c) Breakeven formula when desired profit is given = (Fixed Cost + Desired Profit)
/Contribution per unit
Contribution per unit = Sales per unit less variable price per unit
Contribution per unit = $450-$250 =$200
Fixed cost per month = $15000
Desired Profit = $20000
Breakeven units per month = ($15000+$20000)/$200 = 175 units per month
(d)
(i) Change in variable cost per unit = increase by $20 per unit
Change in fixed cost per unit = decrease by $2400
New variable cost per unit = $ 250+$20 = $270 per unit
Contribution margin per unit = $450 -$270 = $180 per unit
New Fixed cost = $15000-$2400 = $12600
Breakeven units per month = $12600/$180 = 70 units
Page 3 of 13

ASSIGNMENT 03
SS19
ANSWER BOOKLET ACCTG 101
(d)
(ii)
Let number of sales units where existing operation and Greg’s proposed plan
generate the same profit be Q
Method old = Fixed $ 15000; Variable cost per unit $250
Method new = Fixed cost $12600; Variable cost per unit $270
Selling price for both methods $ 450 per unit
The indifference point will be 18,333 units, calculated as follows, Q indicates unit
Volume.
Total Cost for Method old = Total Cost for Method New
Fixed cost + variable cost = Fixed cost + variable cost
$15000 +$250 Q = $ 12600 + $270 Q
$20 Q = $2400
Q = 120 units
(e) Information regarding the breakeven point and margin of safety helps management in many ways.
It provides number of units to be sold (Breakeven units) in particular period in order to bear the
fixed cost for that period and also provide information about the number of units (Margin of Safety
Units) that is required to sell to achieve the desired profit in the particular period. In way
management get to know that any number below it give rise to major issue in near future
(Damodaran, 2011).
Page 4 of 13