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AC4003 Computer Skills For Accounts

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Question:

The above company has a reputation for supplying expensive looking invitation cards for special occasions.  It has been asked to quote for wedding invitations and has estimated the cost of printing 100 invitation cards as follows:

Preparation work                    4 hours @ £30 per hour

Design work                            £120

Paper/Card                              £80

Printing                                   £30

Direct Labour                          2 hour @£23 per hour

Fixed overheads                      £150

Preparation work costs, design work costs and fixed overheads will remain the same irrespective of how many invitation cards are printed.All other costs will vary in proportion to the number of invitations printed. Profit mark-up is 50% of total costs.

As being the firm’s accountant you are required to:

  1. Using a spreadsheet prepare an operating statement for output levels of 100, 300, 550, 1000 and 1250 invitation cards which will show the following:
    1. Total costs
    2. Total profit  
    3. Selling price per 100 invitations
  1. Assume there are three partners in the business called A B and C, calculate the profit for each partner in the ratio of 50:30:20
  2. Prepare a chart to show the profit at each output level
  3. Comment on the effect of increase in paper costs to £90 per 100 invitations
  4. Comment on the effect of 25% increase in all fixed costs.
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