Coursework part 3 - last one

Merioneth

Ok the last thing I'm stuck on is the question where it gives me results from Oct - Dec 20x3 in the form of

No of batches of 20 shirts processed 2500
Total Sales revenue 79125
Total direct materials 1025
Total Direct Labour 31900
Overheads 19825
Profit 26375

The memo that goes with it asks me to do the following

a) Prepare a Forecast profit statement for the six months Jan - June 20X4 based on the above results. Note the no of batches of 20 shirts expected to be processed in this six month period is 4800.

I got to admit in terms of a forecast profit statement I do not have a clue where to start. When I know this I can do it. But I can't think how to begin and my text book is rubbish. Can anyone help?


The rest of the question where it asks for the break even point (in terms of batches, sales revenue) and margins of safety (in terms of batches, sales revenue) is fine I can do that.

The only other thing I need to check is how to work out the contribution per batch of 20 shirts. Is it the sales revenue minus the variable costs?

CJC

This is actually quite straightforward. Assuming the company sells all it makes and expects this to be the situation for the next six months, then you work out the selling price based on the actual production (79125/2500) and multiply by the forecast number of units produced (4800) to give a forecast sales figure of 15,1920.

The forecast for direct labour and materials is calculated similarly - work out the per unit cost for the actual production and multiply by the forecast production. As there is no information to the contrary we can assume that the overheads will remain the same for the increased production.