Answers
Corresponding Working Notes are given against the blank cell as reference. Look for those working notes below. Feel free to comment below if you have any more doubts.
WN 1.
% Increase Material = ($65,500 - $51,000) / $51,000 = 28% (Rounded)
WN 2
Status Quo Labour = Let be Y
($65,500 - $Y) / $Y = 25%
Y = $52,400
WN 3
% Increase depreciation = 0% (Since no change)
WN 4
Difference in utilities = $1,150
So status quo Utilities = $6,000 - $1,550 = $4,550
% Increase Utility = ($6,100 - $4,550) / $4,550 = 34% (Rounded)
WN 5
Incremental profit = 10.5% of incremental revenue = 10.5% x $71,000 = $7,455
WN 6
Let Status quo sale be P
Therefor P x 25% = $71,000
P = $2,84,000
Alternative Sales = $2,84,000 x 125% = $3,55,000
WN 7
Status quo operating profit = 25% of Sales revenue = 25% x 284,000 = $71,000
WN 8
Total Costs = Sales revenue - Operating profit = $284,000 - $71,000 = $213,000
WN 9
At status quo, other costs = 2 x cost of rent
Let Cost of rent be R, so other cost will be 2R
Total costs = $2,13,000 Identified costs till now = $1,17,050 Unidentified costs =$2,13,000 - $1,17,050 =$95,950
$95,950 = R + 2R
R = $31,983 = Rent
2R = $63,967 = Other costs
WN 10
Alternative Rent = $31,983 + 40% = $44,776 (Rounded off)
WN 11
Alternative operating profit = Status quo operating profit + $7,455 = $78,455
WN 12
Alternative Total costs = Alternative sales - Alternative operating profit = $355,000 - $78,455 = $276,545
WN 13
Alternative Other costs = Total Costs - Identified costs = $276,545 - $190,976 =