Answer:
See the explanation below.
Explanation:
DIBB COMPANY
Income Statement (Multiple-Step)
For Year Ended December 31, 2016
Details Amount ($)
Sales (net) 198,000
Cost of goods sold (130,000)
Gross profit 68,000
Operating expenses (45,000)
Operating profit before tax 23,000
Tax (23,000 * 30%) (6,900)
Profit after tax 16,100
Loss on sale of land (5,000)
Profit for the year 11,100
Earning per share (11,100/12,000) 0.93
To prepare a multiple-step income statement for Dibb Company for the year ended December 31, 2016, we need to follow a structured format that separates different components of income and expenses.
Here's how you can create the income statement:
DIBB COMPANY Income Statement (Multiple-Step)
For Year Ended December 31, 2016
Sales (Net): $198,000
Cost of Goods Sold:
Beginning Inventory: $0 (assuming no information provided)
Purchases: (if given, subtract this amount)
Ending Inventory: (if given, subtract this amount)
Cost of Goods Sold: $130,000
Gross Profit: $198,000 - $130,000 = $68,000
Operating Expenses:
Operating Expenses: $45,000
Income Before Tax: $68,000 - $45,000 = $23,000
Other Income and Expenses:
Loss on Sale of Land: $5,000
Income Before Income Tax: $23,000 - $5,000 = $18,000
Income Tax Expense (30%): $18,000 * 0.30 = $5,400
Net Income: $18,000 - $5,400 = $12,600
Earnings per Share (EPS):
EPS = Net Income / Number of Outstanding Shares
EPS = $12,600 / 12,000 shares = $1.05 per share
In this income statement, we used a multiple-step format, which separates various components of income and expenses. It starts with the gross profit, then deducts operating expenses, followed by other income and expenses. Finally, income tax is calculated to arrive at the net income, and the earnings per share are computed.
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he Gilbert Department Store uses the conventional retail inventory method. The following information is available for the month of August 2021: Cost Retail Beginning Inventory 30,000 45,000 Cost of Goods Available for Sale $150,000 $180,000 Net Markups 25,000 Net Markdowns 10,000 Sales 170,000 What was the inventory using the conventional method as of August 31, 2021
Answer:
$52,500
Explanation:
As per given data
Cost Retail
Beginning Inventory $30,000 $45,000
Cost of Goods Available for Sale $150,000 $180,000
Net Markups $25,000
Net Markdowns $10,000
Sales $170,000
As we do not have the ending inventory value, First we need to calculate it. We will make the selling price of all the available inventory at retail value then deducting the actual sales we will have the retail value of available stock. By applying the cost to retail ratio we can calculate the value of ending Inventory.
Cost Retail
Beginning Inventory $30,000 $45,000
Cost of Goods Available for Sale $150,000 $180,000
Total Goods Available for sale $180,000 $225,000
+ Net Markups $25,000
- Net Markdowns $10,000
Sales price of Goods $180,000 $240,000
- Sales $170,000
Ending Inventory at retail $70,000
Now calculate the cost to retail ratio to determine the ending value of inventory at conventional inventory method.
Cost to retail ratio = ( Sale price of goods at cost / Sale price of goods at retail ) x 100 = ( $180,000 / $240,000) x 100 = 75%
Value of Ending inventory at conventional method = $70,000 x 75% = $52,500
On March 1, the board of directors declared a cash dividend of $0.75 per common share to shareholders of record on March 10, payable March 31. There were 131,000 shares issued and outstanding on March 1 and no additional shares had been issued during the month. Record the entries for March 1, 10, and 31. The cash dividends account is used.
Answer and Explanation:
The Journal Entry is shown below:-
Mar-01
Cash dividends Dr, $98,250
(131,000 × $0.75)
To Dividends payable Dr, $98,250
(Being declaration of dividends is recorded)
Mar-10
No entry required
Mar-31
Dividends payable Dr, $98,250
To Cash $98,250
(To record payment of dividends)
On January 1, Year 1, the Mahoney Company borrowed $164,000 cash from Sun Bank by issuing a five-year 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, Year 1. The annual payment on the loan based on the present value of annuity factor would be $40,625. The amount of principal repayment included in the December 31, Year 1 payment is:
Answer:
Principal payment = $27,505.00
Explanation:
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
The principal repayment in year 1 = Annual payment - Interest payment in year 1
Interest payment in year = Interest rate × Principal Amount
=8% × 164,000
= $13,120.00
Principal payment = $40,635 - 13,120 = $27,505.00
Principal payment = $27,505.00
Xion Co. budgets a selling price of $80 per unit, variable costs of $35 per unit, and total fixed costs of $271,000. During June, the company produced and sold 10,900 units and incurred actual variable costs of $352,000 and actual fixed costs of $286,000. Actual sales for June were $895,000. Prepare a flexible budget report showing variances between budgeted and actual results. List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance)
Answer:
Income 219,500 256,000 36,500 Favourable
Explanation:
Flexible Budget report showing variances between budgeted and actual results.
Flexible Actual Variance
Sales 872,000 894,000 22,000 Favourable
Variable expenses 381,500 352,000 29,500 Unfavorable
Contribution margin 490,500 542,000 51,500 Favourable
Fixed expenses 271,000 286,000 15000 Unfavorable
Income 219,500 256,000 36,500 Favourable
Sales $80×$10,900=$872,000
Variable $35×$10,900=$381,500
The income statement and the cash flows from the operating activities section of the statement of cash flows are provided below for Syntric Company. The merchandise inventory account balance neither increased nor decreased during the reporting period. Syntric had no liability for insurance, deferred income taxes, or interest at any time during the period. SYNTRIC COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands) Sales $ 292.3 Cost of goods sold (177.6 ) Gross margin 114.7 Salaries expense $ 29.0 Insurance expense 18.7 Depreciation expense 11.5 Depletion expense 5.4 Interest expense 12.3 (76.9 ) Gains and losses: Gain on sale of equipment 17.5 Loss on sale of land (7.3 ) Income before tax 48.0 Income tax expense (24.0 ) Net income $ 24.0 Cash Flows from Operating Activities: Cash received from customers $ 228.0 Cash paid to suppliers (165.0 ) Cash paid to employees (24.0 ) Cash paid for interest (10.4 ) Cash paid for insurance (14.3 ) Cash paid for income tax (12.4 ) Net cash flows from operating activities $ 1.9 Required: Prepare a schedule to reconcile net income to net cash flows from operating activities. (Enter your answers in thousands rounded to 1 decimal place (i.e., 5,500 should be entered as 5.5). Amounts to be deducted should be indicated with a minus sign.)
Answer and Explanation:
The preparation of the schedule to reconcile the net income to net cash flow from operating activities is presented below:
Cash from operating activities
Net income $24
Adjustment to reconcile
Add: Depreciation expense $11.5
Add: Depletion expense $5.4
Less: Gain on sale of Equipment -$17.5
Add: Loss on sale of land $7.3
Less: increase in account receivable ($292.30 - $228) -$64.30
Add: increase in accounts payable ($177.60 - $165) $12.6
Add: increase in salaries payable ($29 - $24) $5
Add: decrease In prepaid insurance ($18.7 - $14.3) $4.4
Add: Decrease in bond discount ($12.3 - $10.4) $1.9
Add: increase in income tax payable ($24 - $12.4) $11.60
net cash flow from operating activities $4.20
The cash outflow represents in a negative sign while the cash inflow represents in a positive sign
Megatron Corp. earned net income of 13 comma 000 Euros in its overseas branch at France. Its headquarters is located in the U.S. The rate of conversion during set up was $ 1.31 / Euro. What is the value of its income in its home currency if the rate is $ 1.51 / Euro at the end of a financial year and the average rate being $ 1.41 / Euro?
Answer:
$18,330
Explanation:
For translation of income statement items such net income, the applicable rate is the average rate.
Since the average rate being is $1.41 / Euro, we have:
Value of income in home currency = 13,000 euro * $1.41 = $18,330.
Phillip Morris USA is concerned about its declining consumer base. Every year more Americans quit smoking cigarettes and fewer and fewer are taking up the habit. They are considering buying a smokeless tobacco company and a cigar manufacturing company so that they are not entirely dependent on cigarette smokers for revenue. Furthermore, there is a slight increase in the number of people using smokeless tobacco products. If Phillip Morris does decide to acquire these companies, what type of corporate level business strategy will they be engaging in? 1. Cost-leadership 2. Focused differentiation 3. Related diversification 4. Vertical integration 5. Competitive tactics
Answer:
2. Focused differentiation
Explanation:
The business strategy of focused differentiation consists in increasing the amount of business sectors that a company operates.
In this example, Phillip Morris is using focused differentiation because it is adding 2 new business sectors to its operation, with the goal of increasing revenue. The first expansion is in the smokeless tobacco sector, and the second expansion is in the cigar manufacturing sector.
In other words, Phillip morris is trying to make smokeless tobacco products, and cigar products, focusing its differentiation strategy on the sectors it believes will produce the greatest amount of revenue.
Often, through government-supported programs, students may obtain "bargain" interest rates such as 6% or 8% to attend college. Frequently, payments are not due and interest does not accumulate until the student stops attending college. A student has borrowed $42 comma 000 at an annual interest rate of 6.4%. Calculate the amount of interest due 6 months after the student must begin payments.
Final answer:
The interest due 6 months after starting payments on a $42,000 loan at an annual rate of 6.4% is $1,344, based on simple interest calculations.
Explanation:
The student has borrowed $42,000 at an annual interest rate of 6.4%. To calculate the amount of interest due 6 months after the student must begin payments, we must assume that the interest is simple interest (although many student loans actually use compound interest). The formula for simple interest is I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years. In this case:
P = $42,000R = 6.4% annual interest rate, which is 0.064 when expressed as a decimalT = 6 months, which is 0.5 yearsTo calculate the interest, multiply these figures:
I = $42,000 × 0.064 × 0.5 = $1,344
Therefore, the amount of interest due 6 months after the student begins payments is $1,344.
Red Melon has preferred stock that pays a dividend of $5.00 per share and sells for $100 per share. It is considering issuing new shares of preferred stock. These new shares incur an underwriting (or flotation) cost of 1.70%. How much will Red Melon pay to the underwriter on a per-share basis
Answer:
$1.7 per Share
Explanation:
According to the scenario, computation of the given data are as follows:
Dividend paid = $5 per share
Selling price = $100 per share
Underwriting cost = 1.7%
We can calculate the amount pay to the underwriter by using following formula:-
Red Melon Pay to the Underwriter = Selling Price Per Share × Underwriter Cost
= $100 × 1.70%
= $1.7 per Share
Swifty Camera Shop Inc. uses the lower-of-cost-or-net realizable value basis for its inventory. The following data are available at December 31. Units Cost per Unit Net Realizable Value per Unit Cameras Minolta 5 $179 $144 Canon 8 160 180 Light Meters Vivitar 12 113 109 Kodak 10 116 142 What amount should be reported on Swifty Camera Shop’s financial statements, assuming the lower-of-cost-or-net realizable value rule is applied?
Answer:
$4468
Explanation:
Using the lower-of-cost-or-net-realizable value means that the items of closing inventory should be valued at lower of purchase price(invoice price) and the net realizable value,where net realizable means the estimated selling price less estimated cost of making the sale.
Minolta would be valued at NRV of $144 i.e $144*5=$720
Cannon would be valued at cost of $160 i.e $160*8=$1280
Vivitar would be valued at NRV of $109 i.e $109*12=$1,308
Kodak would be valued at cost of $116 i.e $116*10=$1160
Total value of closing inventory on Swifty Camera's Shop financial statement=$720+$1280+$1308+$1160=$4468
Swifty Camera Shop should report a total of $4,468 for its inventory on the financial statements, calculated using the lower-of-cost-or-net realizable value method.
Explanation:To determine the amount to be reported on Swifty Camera Shop’s financial statements for its inventory, we need to apply the lower-of-cost-or-net realizable value rule. This means that for each item, we compare the cost to the net realizable value and report the lower of the two figures.
Inventory ValuationMinolta Cameras: 5 units × $144 = $720 (since $144 NRV is lower than $179 cost)Canon Cameras: 8 units × $160 = $1,280 (since $160 cost is lower than $180 NRV)Vivitar Light Meters: 12 units × $109 = $1,308 (since $109 NRV is lower than $113 cost)Kodak Light Meters: 10 units × $116 = $1,160 (since $116 cost is lower than $142 NRV)The total amount to be reported for the inventory would then be:
$720 (Minolta) + $1,280 (Canon) + $1,308 (Vivitar) + $1,160 (Kodak) = $4,468.
The master budget of Windy Co. shows that the planned activity level for next year is expected to be 50,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected:
Indirect labor Machine supplies Indirect materials Depreciation on factory building Total manufacturing overhead
$720,000 180,000 210,000 150,000 $1,260,000
A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of:_______
a. $1,482,000.b. $1,260,000.c. $1,512,000.d. $1,362,000.
Answer:
a. $1,482,000
Explanation:
The computation of the total manufacturing overhead cost is shown below;
But before that first we need to do following calculations
The Variable overhead for 50000 machine hours is
= $1,260,000 - $150,000
= $1,110,000
As depreciation is not variable cost so it would be excluded
Now for 60,000 machine hours, the variable overhead is
= ($1,110,000 ÷ 50,000) × 60,000
= $1,332,000
And, the fixed overhead is $150,000 i.e depreciation expense
So, the total manufacturing overhead cost is
= Fixed manufacturing overhead + variable manufacturing overhead
= $150,000 + $1,332,000
= $1,482,000
. Problems and Applications Q7 Consider a monopolistically competitive market with N firms. Each firm's business opportunities are described by the following equations: Demand: Q=100N−P Marginal Revenue: MR=100N−2Q Total Cost: TC=50+Q2 Marginal Cost: MC=2Q As N rises, the demand for each firm's product . How many units does each firm produce? 400N 25N 25 25N What price does each firm charge? 125N 75N 75N 100N How much profit does each firm make? 50+625N2 1,875N2 2,500N2−50 1,250N2−50 In the long run, firms will exist in this market.
Answer :
a.As N rises, the demand for each firm’s product will falls as a result of this each firm’s demand curve will shift left.
b.Q = 25/N
c.75/N
d.1250/N2 – 50
e.N = 5
Explanation:
a.As N rises, the demand for each firm’s product will falls as a result of this each firm’s demand curve will shift left.
b.The firm will produce where MR = MC:
100/N – 2Q
= 2Q
Q = 25/N
c.25/N
= 100/N – PP
= 75/N
d.Total revenue
= P + Q = 75/N +25/N = 1875/N2
Total cost = 50 + Q2 = 50 + (25/N)2
= 50 + 625/N2
Profit = 1875/N2 – 625/N2 – 50
= 1250/N2 – 50
e.In the long run, profit will be zero. T
Therefore:
1250/N2 – 50 = 0
1250/N2
= 50
N = 5
The answers of the various sub-parts are:
a. As N rises, the demand for each firm’s product will fall as a result of this each firm’s demand curve will shift left.
b. Q = 25/N
c. 75/N
d. 1250/N2 – 50
e. N = 5
The calculations of the various sub-parts:
a. As N increases, demand for each company's customers declines, leading each firm's demand curve to switch sides.
b.The firm will produce where MR = MC:
[tex]\frac{100}{N}[/tex]– 2Q = 2Q
Q = [tex]\frac{25}{N}[/tex]
c.[tex]\frac{25}{N}[/tex] = [tex]\frac{100}{N}[/tex] – PP =[tex]\frac{75}{N}[/tex]
d.Total revenue = P + Q = [tex]\frac{75}{N}[/tex] +[tex]\frac{25}{N}[/tex] =[tex]\frac{1875}{N2}[/tex]
Total cost = 50 + Q2 = 50 +[tex]\frac{25}{N} \times 2[/tex] = 50 +[tex]\frac{625}{N2}[/tex]
Profit = [tex]\frac{1875}{N2}[/tex] –[tex]\frac{625}{N2}[/tex] – 50 = [tex]\frac{1250}{N2}[/tex] – 50
e.In the long run, profit will be zero.
Therefore:
[tex]\frac{1250}{N2}[/tex] – 50 = 0
[tex]\frac{1250}{N2}[/tex] = 50
N = 5
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Barry's Hobbies produces and sells a luxury animal pillow for $80.00 per unit. In this month of operation, 3,000 units were produced (2,800 were budgeted) and 2,750 units were sold. Barry’s uses FIFO and per-unit costs for beginning inventory are available below. Actual fixed costs are the same as the amount budgeted for the month. The allocation base for overhead is units. There is no inventory of direct materials or work in process. Other information for the month includes:
Variable manufacturing costs $38 per unit
Variable marketing costs $ 2 per unit
Fixed manufacturing costs $60,000 per month
Administrative expenses, all fixed $12,000 per month
Ending inventories:
Direct materials -0-
WIP -0-
Finished goods 750 units
What is operating income when using absorption costing?
Answer:
Net operating income= 43,000
Explanation:
Giving the following information:
Selling price= $80
Production= 3,000 units
Sales= 2,750 units
Variable manufacturing costs $38 per unit
Variable marketing costs $ 2 per unit
Fixed manufacturing costs $60,000 per month
Administrative expenses, all fixed $12,000 per month
Ending inventories:
Finished goods 750 units
Under the absorption costing method, the cost of goods sold includes the fixed manufacturing overhead. We need to calculate the unitary fixed overhead:
Fixed unitary overhead= 60,000/3,000= $20 per unit
Income statement:
Sales= 2,750*80= 220,000
COGS= 2,750*(38 + 20)= (159,500)
Gross profit= 60,500
Variable marketing= 2,750*2= (5,500)
Administrative expenses= (12,000)
Net operating income= 43,000
The operating income using absorption costing for Barry's Hobbies is [tex]\( {\$63,500} \)[/tex].
To calculate operating income using absorption costing, we need to account for both fixed and variable manufacturing costs that are absorbed into the cost of goods sold (COGS).
Step-by-Step Calculation:
1. Calculate Total Variable Costs:
- Variable manufacturing costs per unit: [tex]\( \$38 \)[/tex]
- Variable marketing costs per unit: [tex]\( \$2 \)[/tex]
- Total variable cost per unit: [tex]\( \$38 + \$2 = \$40 \)[/tex]
- Total variable manufacturing costs for 2,750 units sold:
[tex]\[ 2,750 \times \$38 = \$104,500 \][/tex]
- Total variable marketing costs for 2,750 units sold:
[tex]\[ 2,750 \times \$2 = \$5,500 \][/tex]
- Total variable costs:
[tex]\[ \$104,500 + \$5,500 = \$110,000 \][/tex]
2. Calculate Fixed Manufacturing and Administrative Costs:
- Fixed manufacturing costs (budgeted and actual): [tex]\( \$60,000 \)[/tex]
- Fixed administrative costs: [tex]\( \$12,000 \)[/tex]
- Total fixed costs:
[tex]\[ \$60,000 + \$12,000 = \$72,000 \][/tex]
3. Calculate Total Manufacturing Costs (absorption costing):
- Total variable manufacturing costs: [tex]\( \$104,500 \)[/tex]
- Total fixed manufacturing costs: [tex]\( \$60,000 \)[/tex]
- Total manufacturing costs:
[tex]\[ \$104,500 + \$60,000 = \$164,500 \][/tex]
4. Calculate Cost of Goods Sold (COGS):
- COGS includes variable and fixed manufacturing costs absorbed:
[tex]\[ \text{COGS} = \text{Variable manufacturing costs} + \text{Fixed manufacturing costs} \][/tex]
[tex]\[ \text{COGS} = \$104,500 + \$60,000 = \$164,500 \][/tex]
5. Calculate Operating Income (Profit) using Absorption Costing:
- Sales revenue (3,000 units produced and $80 per unit):
[tex]\[ 3,000 \times \$80 = \$240,000 \][/tex]
- Calculate Gross Profit:
[tex]\[ \text{Sales} - \text{COGS} = \$240,000 - \$164,500 = \$75,500 \][/tex]
- Subtract fixed administrative expenses:
[tex]\[ \$75,500 - \$12,000 = \$63,500 \][/tex]
Aqua Primavera, Inc. has provided the following information for the year. Units produced 6 comma 000 units Sales price $ 200 per unit Direct materials $ 30 per unit Direct labor $ 45 per unit Variable manufacturing overhead $ 20 per unit Fixed manufacturing overhead $ 470 comma 000 per year Variable selling and administration costs $ 70 per unit Fixed selling and administration costs $ 270 comma 000 per year What is the unit product cost using variable costing?
Answer:
Unit product cost= $95
Explanation:
Giving the following information:
Direct materials $30 per unit
Direct labor $45 per unit
Variable manufacturing overhead $20 per unit
Under the variable costing method, the unit product cost is calculated using the direct material, direct labor, and variable manufacturing overhead:
Unit product cost= 30 + 45 + 20= $95
On March 1, 2022, Blossom Company acquired real estate, on which it planned to construct a small office building, by paying $86,000 in cash. An old warehouse on the property was demolished at a cost of $9,400; the salvaged materials were sold for $1,940. Additional expenditures before construction began included $1,440 attorney’s fee for work concerning the land purchase, $5,100 real estate broker’s fee, $8,940 architect’s fee, and $15,200 to put in driveways and a parking lot.
Required:
(a) Determine the amount to be reported as the cost of the land.
Answer:
Cost of The Land = $86,000 + $9,400 - $1,940 + $1,440 + $5,100
= $100,000
Therefore, Cost of The Land is $100,000.
Explanation:
cost of constructing the building = $86,000
cost of demolishing old warehouse = $9,400
cost of salvaged materials = $1,440
Additional expenditures:
Attorney's fee = $5,100
Architects's fee = $8,940
Driveways and parking lot fee = $15,200
Answer:
Cost of The Land = $86,000 + $9,400 - $1,940 + $1,440 + $5,100
= $100,000
$100,000.
Explanation:
cost of constructing the building = $86,000
cost of demolishing old warehouse = $9,400
cost of salvaged materials = $1,440
Additional expenditures:
Attorney's fee = $5,100
Architects's fee = $8,940
Driveways and parking lot fee = $15,200
A physical count of Ayayai Company’s inventory at year-end determined that inventory on hand had a value of $1,628,000. Upon further investigation, it was determined that this amount included the following: An inventory purchase of $51,900 made by Ayayai shipped from Sandhill Company on December 28 with terms FOB destination, but not due to be received until January 3. Goods shipped to a customer with a cost of $74,700 with terms FOB destination on December 29, but not expected to reach their destination until January 3. Goods shipped to a customer with a cost of $55,500 with terms FOB shipping point on December 30, but not expected to reach their destination until January 5. Goods held on consignment from Florence Company with a cost $16,300. Compute the amount that should be reported for inventory on Ayayai Company’s balance sheet at December 31, 2022.
Answer:
The amount that should be reported for inventory on Ayayai Company’s balance sheet at December 31, 2022 is $1,504,800
Explanation:
In order to calculate the amount that should be reported for inventory on Ayayai Company’s balance sheet at December 31, 2022 we would have to make the following calculation:
amount that should be reported for inventory on Ayayai Company’s balance sheet at December 31, 2022= Inventory as per physical count -inventory purchase-goods shipped-goods held on consignment
amount that should be reported for inventory on Ayayai Company’s balance sheet at December 31, 2022= $1,628,000-$51,900-$55,500$-$16,300
amount that should be reported for inventory on Ayayai Company’s balance sheet at December 31, 2022=$1,504,800
WP Corporation produces products X, Y, and Z from a single raw material input in a joint production process. Budgeted data for the next month is as follows: Product X Product Y Product Z Units produced 1,600 2,100 3,100 Per unit sales value at split-off $ 14.00 $ 19.00 $ 16.00 Added processing costs per unit $ 5.00 $ 7.00 $ 7.00 Per unit sales value if processed further $ 20.00 $ 20.00 $ 25.00 The cost of the joint raw material input is $69,000. Which of the products should be processed beyond the split-off point? Product X Product Y Product Z A) yes yes no B) yes no yes C) no yes no D) no yes yes
Answer:
B) yes no yes
Explanation:
The preparation is shown below:
Particulars Product X Product Y Product Z
Units produced 1,600 2,100 3,100
Sales Value at split off per unit $14 $19 $16
Total Sales Value at split off (a) $22,400 $39,900 $49,600
Units produced 1,600 2,100 3,100 (X)
Sales Value per unit $20 $20 $25
Additional Processing cost per unit $5 $7 $7
Net Realizable Value = Sales value - Further costs $15 $13 $18 (y)
Total Realizable Value if processed further (b) $24,000 $27,300 $55,800 (x × Y)
Difference = b- a $1,600 -$12,600 $6,200
Processed further Yes No Yes
As the product X and product Z contains positive number so it should be processed and Product Y should not be processed as it contains negative number
As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Soria Company for the month of October.
SORIA COMPANY
Clothing Department
Budget Report
For the Month Ended October 31, 2020
Difference
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
Sales in units
7,900
11,000
3,100
Favorable
Variable expenses
Sales commissions
$2,054
$2,860
$806
Unfavorable
Advertising expense
869
770
99
Favorable
Travel expense
3,476
4,950
1,474
Unfavorable
Free samples given out
1,659
1,210
449
Favorable
Total variable
8,058
9,790
1,732
Unfavorable
Fixed expenses
Rent
1,900
1,900
–0–
Neither Favorable nor Unfavorable
Sales salaries
1,100
1,100
–0–
Neither Favorable nor Unfavorable
Office salaries
800
800
–0–
Neither Favorable nor Unfavorable
Depreciation—autos (sales staff)
600
600
–0–
Neither Favorable nor Unfavorable
Total fixed
4,400
4,400
–0–
Neither Favorable nor Unfavorable
Total expenses
$12,458
$14,190
$1,732
Unfavorable
As a result of this budget report, Joe was called into the president’s office and congratulated on his fine sales performance. He was reprimanded, however, for allowing his costs to get out of control. Joe knew something was wrong with the performance report that he had been given. However, he was not sure what to do, and comes to you for advice.
Prepare a budget report based on flexible budget data to help Joe. (List variable costs before fixed costs.)
Answer:
SORIA COMPANY
Clothing Department's Flexible Budgeted Report:
The report is attached herein.
The variable costs were flexed using 11,000 units sales volume instead of the budgeted 7,900 units as follows.
Workings:
1. Sales Commission = $2,054/7,900 x 11,000 = $2,860
2. Advertising = $869/7,900 x 11,000 = $770
3. Travel Expense = $3,476/7,900 x 11,000 = $4,840
4. Free Samples = $1,659/7,900 x 11,000 = $2,310
The idea is to compute the flexed amounts using unit budgeted cost (e.g. Travel Expense $3,476/7,900) to multiply the flexed volume (11,000).
The fixed costs were not similarly flexed. They are assumed to have completely displayed their nature as fixed irrespective of the level of activity or the sales volume.
Explanation:
A flexible budget is one that changes in volume according to the level of activity. It is not static. This means that the budgeted units change to the level of the actual units. This flexing affects all variable costs based on the now flexed volume while the fixed costs remain since they do not vary according to the level of activity. For example, Sales Commission could be budgeted at $400 under 10,000 volume. If the actual sales volume is 12,000, the Sales Commission has to be flexed to $480 ($400/10,000 x 12,000) to reflect the actual volume performance. Then the flexed budgeted cost is compared to the actual cost to obtain the variance or difference. Actual performance can then be compared based on like terms and not based on unlike terms.
This is the advantage of flexible budgets. They allow a manager's performance to be evaluated based on variable volumes of activity instead of static volumes.
Answer:wow cool ♂️
Explanation:
A commonly cited standard for one-way length (duration) of school bus rides for elementary school children is 30 minutes. A local government office in a rural area conducts a study to determine if elementary schoolers in their district have a longer average one-way commute time. If they determine that the average commute time of students in their district is significantly higher than the commonly cited standard they will invest in increasing the number of school buses to help shorten commute time. What would a Type 2 error mean in this context?
Question Options:
A. The local government decides that the average commute time is 30 minutes.
B. The local government decides that the data provide convincing evidence of an average commute time higher than 30 minutes, when the true average commute time is in fact 30 minutes.
C. The local government decides that the data do not provide convincing evidence of an average commute time higher than 30 minutes, when the true average commute time is in fact higher than 30 minutes.
D. The local government decides that the data do not provide convincing evidence of an average commute time different than 30 minutes, when the true average commute time is in fact 30 minutes.
Answer: A type 2 error in this context will mean that The local government decides that the data do not provide convincing evidence of an average commute time higher than 30 minutes, when the true average commute time is in fact higher than 30 minutes.
A type 2 error in statistics is defined as a situation where a false null hypothesis is not rejected.
In this question, a false null hypothesis would that the average commute time for the elementary school in the district is higher than the average 30 minutes.
The 2016 annual report for Mega Mills disclosed that 1 billion shares of common stock have been authorized. At the end of 2015, 770 million shares had been issued and the number of shares in treasury stock was 99 million. During 2016, the only common share transactions were that 16 million common shares were reissued from treasury and 22 million common shares were purchased and held as treasury stock. Required: Determine the number of common shares (a) issued, (b) in treasury, and (c) outstanding at the end of 2016.
Answer:
a) Share issued = 770 million
b) Treasury stock = 105 million
c) Share outstanding = 665 million
Explanation:
As per the data given in the question,
Disclosed shares = 1 billion
Share in treasure stock = 99 million
Issued share = 16 million
Purchased shares = 22 million
Issued stock is same at 770 million
Treasury stock = 99 million - 16 million + 22 million
= 105 million
Share outstanding = 770 million - 105 million
= 665 million
The minimum number of investors required to vote to change the company's top management is 3. Investors 1 and 2 cannot be certain of always getting their way in how the company will be run.
Explanation:The Darkroom Windowshade Company has 100,000 shares of stock outstanding. To determine the minimum number of investors it would take to vote to change the company's top management, we need to calculate the total number of shares held by investors other than investors 1 and 2.
Investor 1 holds 20,000 shares and investor 2 holds 18,000 shares, so the combined total of their shares is 38,000. The remaining investors hold 15,000 + 10,000 + 7,000 + (5,000 * 6) = 63,000 shares. To achieve a majority vote, we need to find the smallest number of investors who together hold more than 50,000 shares. Since the remaining investors hold a total of 63,000 shares, it would take a minimum of 3 additional investors to vote together to change the company's top management.
Investors 1 and 2 can be certain of always getting their way in how the company will be run if they have more than 50% of the total shares. To determine if they have more than 50%, we calculate the total number of shares held by all investors, which is 20,000 + 18,000 + 15,000 + 10,000 + 7,000 + (5,000 * 6) = 100,000 shares. The shares held by investors 1 and 2 represent 20,000 + 18,000 = 38,000 shares. Since 38,000 is less than 50% of 100,000, investors 1 and 2 cannot be certain of always getting their way in how the company will be run.
On December 31st, Datton, Inc. has cost of goods sold of $ 550000, ending inventory is $ 101000, beginning inventory is $ 120000; and average accounts payable is $ 105000. What is the accounts payable turnover expressed as days? (Round any intermediary calculations to two decimal places, and round your final answer to the nearest day.) A. 72 B. 44 C. 117 D. 67
Answer:
72 days
Explanation:
The computation of the accounts payable turnover ratio is shown below:
Accounts payable turnover ratio = Total Purchases ÷ Average Accounts payable
As we know that
Cost of goods sold = Beginning inventory + total purchases - Ending inventory
i.e
Total Purchases = Cost of goods sold + Ending Inventory – Beginning Inventory
= $550,000 + $101,000 - $120,000
= $531,000
So, the account payable turnover ratio is
= $531,000 ÷ $105,000
= 5.06 times
Now in days it is
= 365 days ÷ 5.06 times
= 72 days
A company purchased land for $92,000 cash. Commissions of $13,000, property taxes of $13,500, and title insurance of $4,200 were also incurred. The $13,500 in property taxes includes $7,400 in back taxes paid by the company on behalf of the seller and $6,100 due for the current year after the purchase date. For what amount should the company record the land? a. $112,400. b. $116,600. c. $122,700. d. $92,000.
Answer:
The answer is option (b) $116,600.00
Explanation:
Solution
The Cash price =$92,000.00
Commission on purchase of land $ = 13,000.00
Property taxes =$7,400.00
Title insurance is=$ 4,200.00
Total cost of land to be recorded is =$116,600.00
The property taxes paid for back date will be added to the land cost but not $6100 which is related to present year.
The property taxes $6100 will be filled to income statement in present year.
Title insurance and commission will be included to cost of land.
Final answer:
The company should record the land at $116,600, which includes the purchase price, commissions, title insurance, and back taxes paid.
Explanation:
When recording the purchase of land on the company's books, all expenditures that are necessary to get the land ready for use should be included in the land's cost. The correct value of the land should include the cash paid for the land itself, commissions, property taxes (which are part of the land acquisition costs), and title insurance. Current property taxes should not be included as they are an expense related to the period after purchase.
The initial purchase price of the land is $92,000. Commissions were $13,000, and title insurance was $4,200. Of the property taxes paid, only the back taxes of $7,400 are considered part of the acquisition cost because they relate to the period before the acquisition. Therefore, the company should record the land at $92,000 + $13,000 + $4,200 + $7,400 = $116,600.
Liang Company began operations on January 1, 2017. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. 2017 Sold $1,351,700 of merchandise (that had cost $981,800) on credit, terms n/30. Wrote off $21,500 of uncollectible accounts receivable. Received $670,400 cash in payment of accounts receivable. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable will be uncollectible. 2018 Sold $1,586,800 of merchandise on credit (that had cost $1,326,300), terms n/30. Wrote off $25,300 of uncollectible accounts receivable. Received $1,182,900 cash in payment of accounts receivable. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable will be uncollectible. Required: Prepare journal entries to record Liang’s 2017 and 2018 summarized transactions and its year-end adjustments to record bad debts expense. (The company uses the perpetual inventory system and it applies the allowance method for its accounts receivable.) (Round your intermediate calculations to the nearest dollar amount.)
Answer:
Liang Company
Journal entries to record Liang’s 2017 and 2018 summarized transactions and its year-end adjustments to record bad debts expense (using the perpetual inventory system and applying allowance method for accounts receivable)
1. 2017 Journal entries:
Debit Accounts Receivable with $1,351,700
Credit Sales Account with $1,351,700
To record sales on credit, terms n/30.
Debit Cost of Goods Sold with $981,800
Credit Inventory Account with $981,800
To record cost of goods sold.
Debit Uncollectible Expense Account with $2,150
Credit Accounts Receivable with $2,150
To write off uncollectible accounts receivable.
Debit Cash with $670,400
Credit Accounts Receivable with $670,400
To record cash received on account.
December 31:
Debit Uncollectible Expense Account with $20,374.50
Credit Allowance for Uncollectible Account with $20,374.50
To record 3% allowance for accounts receivable balance.
2. 2018 Journal entries:
Debit Accounts Receivable with $1,586,800
Credit Sales Account with $1,586,800
To record sales on credit, terms n/30.
Debit Cost of Goods Sold with $1,326,300
Credit Inventory Account with $1,326,300
To record cost of goods sold.
Debit Allowance for Uncollectible Account with $25,300
Credit Accounts Receivable with $25,300
To write off uncollectible accounts receivable.
Debit Cash with $1,182,900
Credit Accounts Receivable with $1,182,900
To record cash received on account.
December 31:
Debit Uncollectible Expense Account with $36,658
Credit Allowance for Uncollectible Account with $36,658
To bring the allowance for accounts receivable balance to 3%.
Explanation:
1. Using the perpetual inventory system where transactions are recorded to inventory immediately and not at period-end, the sales transactions will reduce the balance of the inventory account with the cost of sales and increase the cost of sales with the same amount. The Sales account is increased by sales value while the Accounts Receivable is also increased with the same amount.
2. The write-off is initially charged to the uncollectible expense account directly in 2017 but subsequently, it will be debited to the Allowance of Uncollectible account, applying the allowance method.
3. The perpetual inventory system, inventory transactions are recognized in the inventory and cost of goods sold accounts immediately and not at period-end like the periodic inventory system, which waits until inventory count to recognize transactions.
A customer owns 1,000 shares of XYZZ stock, purchased at $40 per share. The stock is now at $45, and the customer has become neutral on the stock, but believes that the stock still has good long term growth potential. The client asks her representative for a "conservative recommendation" that will give her a positive portfolio return. The client should be told to:
Answer:
The answer is "Sell 10 XYZZ 45 Call-Terms"
Explanation:
The purchaser bought the product at $40, and it is now selling at $45. The purchaser now is on product-neutral but feels it's a strong investment throughout the longterm. The product will now not be sold Unless the client offers calls against both the stock price (put option writer), the investor can generate additional profit revenue in the investment strategy.
It also a balanced approach on the profits, that is the danger here is that the product will also be called off when the product rises quickly and the purchaser will not receive the overhead profit when the product decreases, the consumer pays on both the product, offset by both the prices we pay. Loading puts will also generate high cash. If instead, the product grows, its calls expire and the product is also owned by the purchaser, but when the stock goes down, its limited sales will be executed, requiring the people to purchase the product. So, the purchaser will end up losing twice as quickly in a down market! That's not a "conservative" strategy.Culver Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows. Employee Future Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $86,400. Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules. Year Annual Amortization 2020 $enter a dollar amount 2021 enter a dollar amount 2022 enter a dollar amount 2023 enter a dollar amount 2024 enter a dollar amount 2025 enter a dollar amount
Answer: Please see below for answer
Explanation:
Employee Future Years of Service
Jim 3
Paul 4
Nancy 5
Dave 6
Kathy 6
Total years of service = 24
increase in projected benefit obligation = $86,400
Cost per year = $86,400/ 24 =$3,600
Year 2020, jim =1 paul=1, nancy=1 dave=1 Kath=1
total years=5
cost per year= $3,600
amortization for Year 2020 5x3600= $18,000
Year 2021, jim =1 paul=1, nancy=1 dave=1 Kath=1
total years=5
cost per year= $3,600
amortization for Year 2021 5x3600= $18,000
Year 2022, jim =1 paul=1, nancy=1 dave=1 Kath=1
total years=5
cost per year= $3,600
amortization for Year 2022= 5x3600= $18,000
Year 2023, jim =0 paul=1, nancy=1 dave=1 Kath=1
total years=4
cost per year= $3,600
amortization for Year 2023 =4x3600= $14,400
Year 2024, jim =0paul=0, nancy=1 dave=1 Kath=1
total years=3
cost per year= $3,600
amortization for Year 2024= 3x3600= $10,800
Year 2025, jim =0paul=0, nancy=0 dave=1 Kath=1
total years=2
cost per year= $3,600
amortization for Year 2025= 2x3600= $7,200
Shirt Company is considering adding a new product line, a cloth shopping bag with custom screen printing that will be sold to grocery stores. If the current market price of cloth shopping bags is $2.25 and the company desires a net profit of 60%, what is the target cost? The company estimates the full product cost of the cloth bags will be $ 0.80. Should the company manufacture the cloth bags? Why or why not?
Answer:
Instructions are below.
Explanation:
Giving the following information:
The current market price of cloth shopping bags is $2.25
Target profit= 60%
First, we need to calculate the cost per unit to reach the target cost.
Target cost= selling price*(1-targert profit)
Target cost= 2.25*0.4= $0.9
Now, if $0.8 is the unitary total cost:
Cost= (0.8*100)/2.25= 35.5%
Profit= 100 - 35.5= 64.5%
The company should manufacture the product because it reaches the target profit per unit.
The following information pertains to Guy’s Gear Company: Sales $ 80,000 Expenses: Cost of Goods Sold $ 50,000 Depreciation Expense 6,000 Salaries and Wages Expense 12,000 68,000 Net Income $ 12,000 Accounts Receivable Decrease $ 4,000 Inventory Increase 8,000 Salaries and Wages Payable Increase 750 Required: Present the operating activities section of the statement of cash flows for Guy’s Gear Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Answer and Explanation:
The Presentation of the operating activities section of the statement of cash flows is shown below:-
Guy’s Gear Company
Statement of cash flow using the indirect method
Cash flows from operating activities:
Net income $12,000
Adjustments of net income
with cash provided by operating activities:
Depreciation expense $6,000
Changes in current assets
and current liabilities
Decrease in accounts receivable $4,000
Increase in inventories -$8,000
Increase in salaries and
wages payable $750 -$3,250
Net Cash provided by operating activities $14,750
Therefore to reach the net cash provided by operating activities we simply add net income depreciation expenses and deduct the decrease in accounts receivable, increase in inventories and wages payable.
Willetta Company purchases inventory for $22,000 with terms 2/10, n/30. It then returns $3,200 of the inventory purchased to the supplier and also receives an allowance for defective inventory of $220. The company pays the amount due within the discount period. What is the amount of the discount that will be taken? (Round your answer to the nearest dollar amount.)
a. $320
b. $436
c. $372
Answer:
c. $372
Explanation:
Terms of sale 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.
As per given data
Purchases = $22,000
Sales return = $3,200
Defective Allowance = $220
Receivable = $22,000 - $3,200 - $220 = $18,580
As the payment is made within discount period, so discount will be availed on the amount due
Discount = $18,580 x 2% = $372
Assume the following (T&M Contract): A budget has been established to install 400 ft of pipe at an estimated 150 man hours and a billable cost of $5,040 (note: bare labor cost is $3,360). The original schedule planned for 80 ft of pipe to be installed per day by a 3-man crew working an 8-hour shift. The job was scheduled to start on Monday and finish on Friday. On Monday 60 ft of pipe was installed. On Tuesday 70 ft of pipe was installed and on Wednesday 50 ft of pipe was installed. Actual cumulative man hours incurred to-date is 72 hrs. Note: Assume that $1,000 has been billed to the client to-date. What is the current earned dollar value of the work in place (completed)? a. $1.780 b. $2,268 c. $4,500.50 d. $2,800.27
Answer:
The current earned dollar value of the work in place (completed) is $2,268. The right answer is b
Explanation:
According to the given data we have the following:
total pipeline installed=60+70+50= 180 ft
total cost= $ 5,040
unite price of pipeline=$5,040/400=$12.6
Therefore, in order the current earned dollar value of the work in place completed we would have to use the following formula:
current earned value= pipeline installed*unit price of pipeline=
current earned value=180 *$12.6
current earned value=$2,268
The current earned dollar value of the work in place (completed) is $2,268
1) The Herfindahl index Suppose that three firms make up the entire tire manufacturing industry. One has a 50% market share, and the other two have a 25% market share each.
The Herfindahl index of this industry is _________.
2) Tread Tough, one of the firms with a 25% market share in the tire manufacturing industry, leaves the market.
This would cause the Herfindahl index for the industry to _________.
3) The largest possible value of the Herfindahl index is 10,000 because:
a) An index of 10,000 corresponds to 100 firms with a 1% market share each.
b) An industry with an index higher than 10,000 is automatically regulated by the Justice Department.
c) An index of 10,000 corresponds to a monopoly firm with a 100% market share.
Answer:
0.375 = 37% = 3700
Increases
c) An index of 10000 corresponds to a monopoly firm with 100% market share
Explanation:
The HHI index is found by summimg the square of the concentration ratios of firms
(0.5) ^2 + (0.25)^2 + (0.25)^2 = 0.25 + 0.0625 + 0.0625 = 0.375 = 37% = 3700
If a firm leaves the industry, the hhi index increases because the market power would exist between only two firms.
If HHI is equal to 10,000, it means that the firm is a monopoly. It means the firm has 100% of the market share.
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