Question 1:
A company manufactures 5,000 units of a product monthly. The following costs are incurred:
Fixed Costs: $80,000
Variable Costs: $25 per unit
(a) Calculate the total cost of production.
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(b) If production increases to 6,000 units, calculate the new total cost.
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Question 2:
A business produces and sells its product for $100 per unit. The following costs are incurred:
Fixed Costs: $60,000
Variable Costs: $40 per unit
(a) Calculate the break-even point in units.
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(b) If the company sells 1,200 units, calculate the total profit.
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Question 3:
A bakery incurs the following costs:
Fixed Costs: $30,000
Variable Costs: $15 per cake
(a) Calculate the cost per cake if 2,000 cakes are produced.
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(b) Discuss the impact on cost per cake if the bakery produces 3,000 cakes instead.
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Question 4:
The following data is provided for a company:
Gross Profit: $200,000
Revenue: $500,000
Net Profit: $80,000
(a) Calculate the Gross Profit Margin.
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(b) Calculate the Operating Profit Margin.
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(c) Evaluate what these ratios indicate about the company’s performance.
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Question 5:
A business has the following financial data:
Revenue: $400,000
Cost of Goods Sold (COGS): $260,000
Operating Expenses: $80,000
(a) Calculate the Gross Profit Margin.
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(b) Calculate the Operating Profit Margin.
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Question 6:
A retail store reports:
Gross Profit: $50,000
Net Profit: $20,000
Capital Employed: $200,000
(a) Calculate the Return on Capital Employed (ROCE).
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(b) Explain the significance of this ratio for investors.
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Question 7:
A company’s financial position is as follows:
Current Assets: $120,000
Current Liabilities: $60,000
(a) Calculate the Current Ratio.
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(b) Explain whether the company has a strong short-term liquidity position.
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Question 8:
The following data is available for a company:
Current Assets: $90,000
Inventory: $30,000
Current Liabilities: $45,000
(a) Calculate the Acid-Test Ratio.
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(b) Discuss the importance of excluding inventory when assessing liquidity.
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Question 9:
The balance sheet of a business shows:
Non-Current Assets: $400,000
Current Assets: $150,000
Current Liabilities: $100,000
Equity: $350,000
(a) Calculate the Working Capital.
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(b) Analyze the implications of the working capital amount for the company’s operations.
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