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accounting difficult question
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Number of ordinary shares are 100,000.
Now it says that the company made a right issue of 20,000 shares of $1 each for $36,000.
your objective till now is to calculate the price of 1 right issue share.
price of 1 right issue share is 36,000/20,000 = $1.8
since face value is $1 so $0.8 is the premium value.
the 3 affects till now are
that ordinary shares will increase to 100,000+20,000 = 120,000 shares
ordinary share capital will increase to 100,000 + 36000 = $136,000
share premium account will increase to 30,000 + (20,000 x $0.8 ) = $46,000
Now it says that a bonus issue was made on 1 for 6 basis for ordinary shares AND the share premium was used for this purpose.
first of all find the number of bonus shares. i.e:
new number of shares/6
120,000/6 = 20,000 shares
since face value is $1 so ($1 x 20,000) = $20,000 was transferred from share premium account to share capital account.
that means new balance on share premium account is 46,000 - 20,000 = $26000. option A
Now it says that the company made a right issue of 20,000 shares of $1 each for $36,000.
your objective till now is to calculate the price of 1 right issue share.
price of 1 right issue share is 36,000/20,000 = $1.8
since face value is $1 so $0.8 is the premium value.
the 3 affects till now are
that ordinary shares will increase to 100,000+20,000 = 120,000 shares
ordinary share capital will increase to 100,000 + 36000 = $136,000
share premium account will increase to 30,000 + (20,000 x $0.8 ) = $46,000
Now it says that a bonus issue was made on 1 for 6 basis for ordinary shares AND the share premium was used for this purpose.
first of all find the number of bonus shares. i.e:
new number of shares/6
120,000/6 = 20,000 shares
since face value is $1 so ($1 x 20,000) = $20,000 was transferred from share premium account to share capital account.
that means new balance on share premium account is 46,000 - 20,000 = $26000. option A
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share premium account will increase to 30,000 + (20,000 x $0.8 ) = $46,000
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30,000 + (20,000 x 0.8 ) = 46,000
hamza87 said:
Rights issue:
first find the amount to be credited to the share premium a/c (SP a/c ) after the rights issue
this is done by first multiplying the number of shares and the par value => 20000*1 =$20000
deduct this from the tota amount received from share issue => 36000-20000= $16000
16000 is credited to SP a/c. new balance on account is 30000+16000 = $46000
bonous issue: total no. of shares issued => 100000+20000= 120000
no. of bonus shares issued => 120000/6 = 20000 shares
value of bonus shares => 20000*1 = $20000
balance on share permium a/c => 46000-20000 = $26000
therefore the answer is A
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Hey!
Can anyone solve these questions?
Nov 04 - Q. 5 and 17
June 05 - Q. 4 and 16
Nov 05 - Q. 8 and 9
Nov 06 - Q. 6, 16, 30
June 07 - Q. 14, 22, 28, 29
Nov 07 - Q. 4, 18
Jun 08 - Q. 4, 8, 29
Will be grateful.
Thanks.
Can anyone solve these questions?
Nov 04 - Q. 5 and 17
June 05 - Q. 4 and 16
Nov 05 - Q. 8 and 9
Nov 06 - Q. 6, 16, 30
June 07 - Q. 14, 22, 28, 29
Nov 07 - Q. 4, 18
Jun 08 - Q. 4, 8, 29
Will be grateful.
Thanks.
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30 A company manufactures one product. Variable costs are $600 000. Fixed costs are $300 000.
If it bought the product from another supplier, it could use existing machinery to make a total
contribution of $400 000. Fixed costs would not change.
What is the maximum price it should pay to obtain the product from another supplier?
A $600 000 B $700 000 C $900 000 D $1 000 000
ANS - D.
but how? as in what approach should be taken? whats the logic man
If it bought the product from another supplier, it could use existing machinery to make a total
contribution of $400 000. Fixed costs would not change.
What is the maximum price it should pay to obtain the product from another supplier?
A $600 000 B $700 000 C $900 000 D $1 000 000
ANS - D.
but how? as in what approach should be taken? whats the logic man
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whatsmyname said:
Sales Revenue - Variable Costs = Contribution
You calculate how much sales revenue the company needs in order to generate the same contribution as buying from another supplier:
Sales - 600,000 = 400,000
Sales = $1,000,000
The logic is: If the company can produce the same goods in $1 Million, it shouldn't pay MORE THAN THAT to buy them from another supplier. Less is fine!
But, the questions asks for the MAX it should pay.sm1 help me
http://www.xtremepapers.me/CIE/Internat ... _qp_12.pdf
MS: http://www.xtremepapers.me/CIE/Internat ... _ms_12.pdf
q: 14,15,27,28
PLEASE
http://www.xtremepapers.me/CIE/Internat ... _qp_12.pdf
MS: http://www.xtremepapers.me/CIE/Internat ... _ms_12.pdf
q: 14,15,27,28
PLEASE
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QUESTION 14:
ADD THE FOLLOWING:
DIRECT MATERIALS ( RAW ) = 89,600
DIRECT LABOUR = 115,000
DIRECT EXPENSES ( ROYALTIES ) 4200
89,600+115,000+4,200 = 208,800
NOW ADD INDIRECT MANUFACTURING COSTS:
208,800 + 3700 ( DEPRECIAITON OF PLANT) = 212,500.
OPTION C.
QUESTION 15
CURRENT ASSETS - CURRENT LIBILITIES = NET CURRENT ASSETS
CURRENT ASSETS = 6000+4000+12000 = 22000
CURRENT LIABILITIES = 9000+1500+2500+4500 = 17500
22000-17500 = 4500
OPTION B
QUESTION 27
FIRST NOTE THAT RENT IS INCLUDED IN FIXED COST.
FOR 30,000 UNITS FIRST INCREASE THE RENT BECAUSE OUTPUT HAS INCREASED BY 20,000 UNITS.
NEW RENT IS :
6000 + [6000 X 50/100] = 9000
OLD FIXED COST WITHOUT RENT IS 15000 - 6000 = 9000
NEW FIXED COST WITH NEW RENT IS 9000 + 9000 = 18000
VARIABLE COST IS 0.60 X 30000 = 18000
TOTAL COST IS = 18000 + 18000 = 36000
PER UNIT TOTAL COST IS 36000/30000 = 1.20
OPTION D
MY CONCEPT REGARDING QUESTION 28 IS STILL NOT CLEARED SO IAM SORRY!!!
ADD THE FOLLOWING:
DIRECT MATERIALS ( RAW ) = 89,600
DIRECT LABOUR = 115,000
DIRECT EXPENSES ( ROYALTIES ) 4200
89,600+115,000+4,200 = 208,800
NOW ADD INDIRECT MANUFACTURING COSTS:
208,800 + 3700 ( DEPRECIAITON OF PLANT) = 212,500.
OPTION C.
QUESTION 15
CURRENT ASSETS - CURRENT LIBILITIES = NET CURRENT ASSETS
CURRENT ASSETS = 6000+4000+12000 = 22000
CURRENT LIABILITIES = 9000+1500+2500+4500 = 17500
22000-17500 = 4500
OPTION B
QUESTION 27
FIRST NOTE THAT RENT IS INCLUDED IN FIXED COST.
FOR 30,000 UNITS FIRST INCREASE THE RENT BECAUSE OUTPUT HAS INCREASED BY 20,000 UNITS.
NEW RENT IS :
6000 + [6000 X 50/100] = 9000
OLD FIXED COST WITHOUT RENT IS 15000 - 6000 = 9000
NEW FIXED COST WITH NEW RENT IS 9000 + 9000 = 18000
VARIABLE COST IS 0.60 X 30000 = 18000
TOTAL COST IS = 18000 + 18000 = 36000
PER UNIT TOTAL COST IS 36000/30000 = 1.20
OPTION D
MY CONCEPT REGARDING QUESTION 28 IS STILL NOT CLEARED SO IAM SORRY!!!
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what i dont understand is why u are using the VC 600k of production with the contribution 400K of buying in..i mean wont the VC change if u switch from manufacturing to buying in? meaning how do u justify mixing the costs from two different projects?
___________________________________________________________________________________
also in this question why do they use the budgeted output for valuation? [ans = 200]
28 A business provides the following data for the year.
budgeted output (units) 10 000
actual output (units) 8 000
$
budgeted fixed production costs 1 200 000
budgeted variable production costs 800 000
budgeted fixed selling overhead 600 000
What is the absorption cost per unit used for stocktaking?
A $200 B $250 C $260 D $325
___________________________________________________________________________________
@ks136 »
Q14 = Production cost = all costs incurred on production and ANS = 115+3.7+89.6+4.2=212.5 or 212500
u dun have to deduct closing stock because ur not making a trading a/c ur just finding the COST INCURRED on production.
Q15 = 6000-4500-2500-1500[they prepaid which is liability 4 us]+4000-9000+12000=4500
Q27 = non rent FC is 15000-6000=9000
if more than 20000 is made new rent becomes 6K + [50% x 6K]=9000
Therefore TFC = 9000+9000 = 18000 and TVC = 30000 x 0.6 = 18000
So TC = 36000 and CPU = 36000/30000=1.2
Q28 = It reduces operating profits because the value of stocks fall by the amount of FC allocated onto them, and construct a Trading a/c and see that if Closing Stock values get reduced then the profits decline. in this particular question opening stock dips too, but the net effect will be a fall..
___________________________________________________________________________________
also in this question why do they use the budgeted output for valuation? [ans = 200]
28 A business provides the following data for the year.
budgeted output (units) 10 000
actual output (units) 8 000
$
budgeted fixed production costs 1 200 000
budgeted variable production costs 800 000
budgeted fixed selling overhead 600 000
What is the absorption cost per unit used for stocktaking?
A $200 B $250 C $260 D $325
___________________________________________________________________________________
@ks136 »
Q14 = Production cost = all costs incurred on production and ANS = 115+3.7+89.6+4.2=212.5 or 212500
u dun have to deduct closing stock because ur not making a trading a/c ur just finding the COST INCURRED on production.
Q15 = 6000-4500-2500-1500[they prepaid which is liability 4 us]+4000-9000+12000=4500
Q27 = non rent FC is 15000-6000=9000
if more than 20000 is made new rent becomes 6K + [50% x 6K]=9000
Therefore TFC = 9000+9000 = 18000 and TVC = 30000 x 0.6 = 18000
So TC = 36000 and CPU = 36000/30000=1.2
Q28 = It reduces operating profits because the value of stocks fall by the amount of FC allocated onto them, and construct a Trading a/c and see that if Closing Stock values get reduced then the profits decline. in this particular question opening stock dips too, but the net effect will be a fall..
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@ WHATSMYNAME
OVER HEAD ABSORPTION RATE IS BASED ON BUDGETED FIGURES.YOU DECIDE IN ADVANCE THAT HOW MUCH OVER HEADS ARE GOING TO BE INCURRED IN YOUR PRODUCTION PROCESS THATS WHY YOU TAKE BUDGETED FIGURES.
OVER HEAD ABSORPTION RATE IS BASED ON BUDGETED FIGURES.YOU DECIDE IN ADVANCE THAT HOW MUCH OVER HEADS ARE GOING TO BE INCURRED IN YOUR PRODUCTION PROCESS THATS WHY YOU TAKE BUDGETED FIGURES.