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Management Accountant of Coffee Shack has been analysing income statement on the store locations and...

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Accounting

  1. Management Accountant of Coffee Shack has been analysing income statement on the store locations and drawn management attention of underperforming. The statement has shown details for the period ending 31 December 20x2 is as follows:

Sales 350,000
Direct Material 140,000
Direct Wages 70,000
Variable overheads 43,750
Fixed overheads 17,500
Admin Overheads 52,500
Selling & distributing overheads 30,600
Total Expenses 354,350
Profit/Loss (4,350)

Calculate and comment:

  • Calculate the total contribution and discuss importance of break-even sale.
  • Profitability ratios
  • 30% of sales contain meal deals and representative cost associated to material is 45%. Evaluate viability of proposal when increase in sale for meal deals by 20% and Direct Material by 15% with other Selling & distributing overheads of 4000 will generate profits for upcoming period.
  • Explain results and show benefits of Cost volume profit analysis

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