Call III 23 06 21 with Sol

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1 ACCOUNTING, FINANCE & CONTROL _ Arena Written Test - Call III – 23rd June 2021 QUESTION 1 – (4 points) Consider the following data about company A Actual data (2020) Budgeted data (2021) Volume of sales [units] 2,500 3,000 Price/unit [€/unit] 44 40 Inventory of finished goods (beginning of the year) [€] 7,000 4,000 Direct manufacturing labour [€] 25,000 27,000 Manufacturing overhead [€] 11,000 11,500 Cost for direct material usage [€] 31,000 34,000 Other operating revenues [€] 0 0 Financial Expenses [€] 3,000 4,000 Repayment of debt [€] 1,000 1,200 You also know that: • the budget of the company indicates a 15% increase in the 2021 EBIT • 2020 EBIT = 15,000 € • inventories left on the December 31st, 2021 = 0 • the company adopts an incremental approach to calculate the budgeted period costs. This means that the increase of the budgeted period costs of the year (t+1) is calculated by multiplying the period costs of the year (t) by a coefficient (1+ α). Based on this information, what is the value of alfa α for budgeting the 2021 period costs? A. 25% B. 8.45% C. 5% D. 15% as the EBIT Solution [2020] Revenues 2020 = (2,500 x 44) =110,000 € Cost of goods sold = cost of good manufactured + inventory used Cost of good manufactured= 31,000 € (material usage) + 25,000 € (labor) + 11,000 € (overhead) = 67,000 € Inventory used = 7,000 € – 4,000 € = 3,000 € Cost of goods sold = 70,000 € Gross margin = 110,000 € - 70,000 € = 40,000 € 2 Period cost budget = 40,000 € (Gross margin) – 15,000 € (Ebit) = 25,000 € [2021] Revenues 2020 = (3,000 x 40) =120,000 € Cost of good manufactured= 34,000 € (material usage) + 27,000 € (labor) + 11,500 € (overhead) = 72,500 € Inventory used = 4,000 €- 0 = 4,000 € Cost of goods sold = 76,500 € Gross margin = 120,000 € - 76,500 e= 43,500 € Ebit =…