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Sunday, January 24, 2021

Accounts and Finance Work Sheet: Singh Tech

 

Accounts and Finance Work Sheet: Singh Tech ( ST)

Business Management worksheet


Topic/s covered: Break-even Analysis

·       Meaning

·       Calculation of BEP

·       Calculation of margin of safety (MOS)

·       Break-even chart

Sing Tech (ST), a private limited company that manufactures 'Design and Gaming' compatible desktop computers and is based in Singapore. It is owned by Ms. Sim who worked as a data management senior executive at Sing Compu Tech (SCT). Though their target market is industrial designers and game developers, customized computers are delivered to individual customers.

ST uses   private distribution agency to deliver orders. During the year 2019- 2020, ST delivered 2500 computers. However, individual customer orders are delivered by the company itself.

The following information is available:

·       Sales price $ 1,200 per computer

·       Variable cost $ 800 per computer

·       Annual fixed cost $ 400,000

Questions:

a)      With reference to Sing Tech, explain the term fixed cost

[2 marks]

b)      For Sing Tech:

[2 marks]

        i.            Calculate the break-even quantity in units.

[2 marks]

       ii.            Calculate the margin of safety in units.

[2 marks]

     iii.            Calculate the net profit if 2500 computers are sold.

[2 marks]

     iv.            Construct a fully labeled break-even chart.

[5 marks]

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