Ramikin Co Is a Fully Owned Subsidiary of Bobbin Ltd,an

question 49

Multiple Choice

Ramikin Co is a fully owned subsidiary of Bobbin Ltd,an Australian company.Bobbin Ltd purchased all the issued capital of Ramikin Ltd on 1 July 2014.Ramikin Ltd is based in Canada.The following information is summarised from the foreign currency accounts of Ramikin Ltd for the period ended 30 June 2015. Ramikin Ltd
Statement of comprehensive income period ended 30 June 2015
$\begin{array}{|l|r|r|}\hline & \text { SCAN } & \text { SCAN } \\\hline \text { Sales } & 5000 & \\\hline \text { less Cost of goods sold } & & \\\hline \text { Opening inventory } & 300 & \\\hline \text { Purchases } & 2150 & \\\hline \text { Closing inventory } & \underline{(400) } & \underline{2050} \\\hline \text { Gross profit } & & 2950 \\\hline \text { Expenses } & & \underline{1200} \\\hline \text { Operating profit } & & 1750 \\\hline \text { Income tax expense } & & \underline{980} \\\hline \text { Operating profit after tax } & & \underline{770} \\\hline\end{array}$

Ramikin Ltd
Statement of financial position as at 30 June 2015
$\begin{array}{|l|r|r|}\hline \text { Assets } \\\hline \text { Plant and equipment } & & 7450 \\\hline \text { Land } & & 4000 \\\hline \text { Cash and debtors } & & 830 \\\hline \text { Inventory } & & \underline{400} \\\hline \text { Total assets } & & \underline{12680} \\\hline \text { Liabilities } & & \\\hline \text { Bank loan } & & 4000 \\\hline \text { Trade creditors } & & 610 \\\hline \text { Shareholders' funds } & & \\\hline \text { Share capital } & & 5300 \\\hline \text { Retained eamings } & & \\\hline \text { 31 July } 2014 & 2000 & \\\hline \text { 30 June 2015 } & 770 & \underline{2770} \\\hline \text { Totane liabilities and shareholders' funds } &&12680\\\hline\end{array}$ Additional information:
All revenues and expenses were earned or incurred evenly throughout the year.
Inventory was purchased evenly over the period,with the inventory on hand at the end of the period purchased over the quarter ending on 30 June and trade creditors were accrued evenly over the period.
Exchange rate information:
$$\begin{array} { | l | l | } \hline \text { July } 2014 & \text { \$CAN1.00 } = \text { A\$1.23 } \\\hline 1 \text { July } 2014 & \text { \$CAN1.00 } = \text { A\$1.150 } \\\hline \text { Average for the year ended } 30 \text { June } 2015 & \text { SCAN1.00 } = \text { A\$1.140 } \\\hline \text { Average rate for quarter ending } 30 \text { June } 2015 & \text { \$CAN1.00 } = \text { A\$1.210 } \\\hline\end{array}$$ Based on the information provided.What is the gain/(loss) on foreign currency translation for Ramikin Ltd for the period?

• A) gain A$385
• B) loss A$28
• C) loss A$612
• D) gain A$376

Understand the assumptions underlying CVP analysis and their implications.

Apply sensitivity analysis to assess changes in assumptions.

Understand the concept and calculation of operating leverage.

Distinguish between fixed and variable costs and their roles in CVP analysis.

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