comparative income approach,
Q: Calculate the incremental savings (or loss) per pound if the company outsources the product. If the…
A: In the given question, we have to take decision whether to internally produce the product or…
Q: Observe the net income for both companies. Which company is more profitable? Which company is more…
A: Solution:- Observation of net income for both companies as follows under:- Company 2010 2009 2008…
Q: If a company decreases the variable expense per unit while increasing the total fixed expenses, the…
A: Breakeven Point: The breakeven point is the level of creation at which the costs of creation are…
Q: Walkin Inc. is considering the write-down of its longtermplant because of a lack of profitability.…
A:
Q: A growing firm is contemplating switching from a FIFO to a LIFO cost flow assumption forinventories…
A: In case of rising prices, when the LIFO is applied the cost of goods sold will increase (as the…
Q: Let’s say that two firms, A and B have positive profit margins. B’s fixes costs as a percentage of…
A: Fixed costs are expenses that do not change based on production levels; variable costs are expenses…
Q: The Golden Fence Company and Stone Wall Corporation are competitors in manufacturing walls and…
A: Profitability ratios are the ratios that are calculated to know the different profits as a…
Q: How might a company simplify its use of the NRV method when final selling prices can vary sizably in…
A: Net Realizable Value (NRV) Method: NRV method is a method of joint cost allocation which takes into…
Q: Explain what the significance of having a high/low Price-to-Book ratio means about the company's
A: Price/Book value is ratio of stock price in actual market and book value is value of share as books…
Q: A graphic depiction of the break-even point is known as a cost-volume-profit (CVP) chart whereby the…
A: The representation of break even point in graphical form is said to be cost volume profit analysis.
Q: Explain why a segment with an operating loss can cause the company to have a decrease in total…
A: Introduction A segment is eliminated based on the comparison of total cost incurred by that segment…
Q: In a multi-product company, as the mix of the products being sold changes, the overall contribution…
A: Overall contribution margin is the mix of individual contribution margin with the weights of their…
Q: During a period of rising inventory costs and stable output prices, describe how net income and…
A: First in first out Method (FIFO) First in first out method is one of the popular method which was…
Q: Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: O…
A: Contribution margin = Selling price - variable cost Break even point = Fixed cost / Contribution…
Q: Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a…
A: FIFO (First in first out) method makes the assumption that inventory items that are purchased first…
Q: Break-even analysis is concerned with determining a point at which the company can minimize total…
A: Break-even point is the point reached by the company where the revenues and costs of the firm are in…
Q: Which of the following statements is true?
A: Companies tries to use the methods of the inventory valuation so that the tax liability of the…
Q: The assumptions on which cost-volume-profit analysis is based appear to be most valid for…
A: Cost volume profit analysis in the business shows relationship between costs, number of units and…
Q: Discuss the economic characteristics of firms that have the following mix of profit margin and asset…
A: Introduction: The net asset turnover is inversely proportional to the profit margin. it means higher…
Q: In all respects, Company A and Company B are identical except that Company A’s costs are mostly…
A:
Q: in a cost volume profit analysis explain what happen at the break even point and why company do not…
A: Cost volume profit analysis: It is a technique that analyses the effect of cost and volume on…
Q: Explain how a shift in the sales mix could result in both a higher break-even point and a lower net…
A: Sales mix involves the composition of different products and some products have a higher margin of…
Q: What is the interpretation of a price-to-book ratio = 1? Select one: a. The selling price of the…
A: PB ratio is a commonly used ratio in the industry to identify the stocks for investing. It comes…
Q: Is there a point in a cost-volume-profit analysis when the company is expected to profit?
A: Is there a point in a cost-volume-profit analysis when the company is expected to profit? Answer:…
Q: operating leverage factor t
A: Operating leverage factor = (Sales - Variable costs)/(Sales - Variable costs) - Fixed costs
Q: Calculate the effect on profit of a proposed change in ‘Sales Mix’ from the following data and also…
A: Sales mix should be such that the total contribution can be maximised. Which can be done by giving…
Q: When comparing the lower of cost to market the appropriate market value is determined before…
A: The inventory costing approach known as the lower-of-cost-or-market (LCM) values inventory at the…
Q: Observe the net income for both companies. Which company is more profitable? Which company is more…
A: Net income is defined as gross profit minus any other expenses and costs, as well as any other…
Q: Which of the following option shows the rate at which company is earning profit? Select one: a. All…
A: The question is multiple choice question. Required Choose the Correct Option.
Q: A company's break-even point will not be changed by:
A: Break-even point i Break-even point is a level of activity where no profit is gained and no loss…
Q: Bulldogs Inc. wants to determine the impact of the change in selling price of its sole product in…
A: Sales price variance is the difference between the actual and standard/Budgeted selling price of…
Q: If a company decreases its selling price for its products. The Increase? Total cost Cost plus…
A: Breakeven quantity increases with the following changes: Increase in amount of fixed costs,…
Q: Questions: Does a low return on sales indicate a weak company? (Y/N). Explain your answer. Do…
A: Multi Step statement of comprehensive income shows all incomes and all expenses of the business at…
Q: When comparing the lower of cost to market the appropriate market value is determined before…
A: The inventory costing approach known as the lower-of-cost-or-market (LCM) values inventory at the…
Q: For each situation, list the assumption, principle, or constraint that has been violated, if any.…
A: Situation a violates the revenue recognition principle.
Q: When applying lower of cost or net realizable value under the FIFO, average cost, or specific…
A: The lower of cost or net realizable value method says we should record the inventory at market price…
Q: Which of the following occurs if a company experiences an increase in its fixed costs? Select one: O…
A: Fixed cost indicates the cost which remains constant to a certain level of activity after which the…
Q: In competitive markets economic profit becomes zero in the long-run. However, it is also possible…
A: Economic profits and losses play a crucial role in the model of perfect competition. The existence…
Q: In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do…
A: Break-even point: It is that point in the business when all its costs have been recovered.…
Q: Compared to companies that have a cost structure that is mainly comprised of variable costs,…
A: Ans. Mostly companies incur two types of cost - Variable cost or fixed cost. Variable cost changes…
By using the comparative income approach, calculate the dropping of Glass
Globe segment. Justify whether Excess Earth Company should retain or drop the segment.
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- The production of a new product required Zion Manufacturing Co. to lease additional plant facilities. Based on studies, the following data have been made available: Estimated annual sales24,000 units Selling expenses are expected to be 5% of sales, and net income is to amount to 2.00 per unit. Required: 1. Calculate the selling price per unit. (Hint: Let X equal the selling price and express selling expense as a percentage of X.) 2. Prepare an absorption costing income statement for the year ended December 31, 2016. 3. Calculate the break-even point expressed in dollars and in units, assuming that administrative expense and factory overhead are all fixed but other costs are fully variable.Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?Bethany Company has just completed the first month of producing a new product but has not yet shipped any of this product. The product incurred variable manufacturing costs of 5,000,000, fixed manufacturing costs of 2,000,000, variable marketing costs of 1,000,000, and fixed marketing costs of 3,000,000. Under the variable costing concept, the inventory value of the new product would be: a. 5,000,000. b. 6,000,000. c. 8,000,000. d. 11,000,000.
- Jean and Tom Perritz own and manage Happy Home Helpers. Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Next year, HHH expects to purchase 25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows: There is no work-in-process inventory and no finished goods inventory; in other words, a cleaning is started and completed on the same day. Required: 1. Prepare a statement of cost of services sold in good form. 2. How does this cost of services sold statement differ from the cost of goods sold statement for a manufacturing firm?Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special order to purchase 15,000 arc printers has recently been received from another company and Zena has idle capacity to fill the order. Zena will incur an additional $2 per printer for additional labor costs due to a slight modification the buyer wants made to the original product. One-third of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. When negotiating the price, what is the minimum selling price that Zena should accept for this special order?
- Cinnamon Depot bakes and sells cinnamon rolls for $1.75 each. The cost of producing 500,000 rolls in the prior year was: At the start of the current year, Cinnamon Depot received a special order for 18,000 rolls to be sold for $1.50 per roll. The company estimates it will incur an additional $1,000 in total fixed costs in order to lease a special machine that forms the rolls in the shape of a heart per the customers request. This order will not affect any of its other operations. Should the company accept the special order? (Show your work.)Poleski Manufacturing, which maintains the same level of inventory at the end of each year, provided the following information about expenses anticipated for next year: The selling price of Poleskis single product is 16. In recent years, profits have fallen and Poleskis management is now considering a number of alternatives. Poleski wants to have a net income next year of 250,000, but expects to sell only 120,000 units unless some changes are made. The president of Poleski has asked you to calculate the companys projected net income (assuming 120,000 units are sold) and the sales needed to achieve the companys net income objective for next year. Also, compute Poleskis contribution margin per unit, contribution margin ratio, and break-even point for next year. The worksheet CVP has been provided to assist you. Note that the data from the problem have already been entered into the Data Section of the worksheet.Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Next year, HHH expects to purchase 25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows: There is no work-in-process inventory; in other words, a cleaning is started and completed on the same day. Required: 1. Prepare a statement of services produced in good form. 2. What if HHH planned to purchase 30,000 of direct materials? Assume there would be no change in beginning and ending inventories of materials. Explain which line items on the statement of services produced would be affected and how (increase or decrease).
- Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Next year, HHH expects to purchase 25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows: There is no work-in-process inventory and no finished goods inventory; in other words, a cleaning is started and completed on the same day. HHH expects to sell 15,000 cleanings at a price of 45 each next year. Total selling expense is projected at 22,000, and total administrative expense is projected at 53,000. Required: 1. Prepare an income statement in good form. 2. What if Jean and Tom increased the price to 50 per cleaning and no other information was affected? Explain which line items in the income statement would be affected and how.Bienestar, Inc., has two plants that manufacture a line of wheelchairs. One is located in Kansas City, and the other in Tulsa. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for 1,620. Sales volume averages 20,000 units per year in each plant. Recently, the Kansas City plant reduced the price of the tilt model to 1,440. Discussion with the Kansas City manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called non-value-added costs. The Kansas City manufacturing and selling costs for the tilt model were 1,260 per unit. The Kansas City manager offered to loan the Tulsa plant his cost accounting manager to help it achieve similar results. The Tulsa plant manager readily agreed, knowing that his plant must keep pacenot only with the Kansas City plant but also with competitors. A local competitor had also reduced its price on a similar model, and Tulsas marketing manager had indicated that the price must be matched or sales would drop dramatically. In fact, the marketing manager suggested that if the price were dropped to 1,404 by the end of the year, the plant could expand its share of the market by 20 percent. The plant manager agreed but insisted that the current profit per unit must be maintained. He also wants to know if the plant can at least match the 1,260 per-unit cost of the Kansas City plant and if the plant can achieve the cost reduction using the approach of the Kansas City plant. The plant controller and the Kansas City cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices. Required: 1. Calculate the target cost for expanding the Tulsa plants market share by 20 percent, assuming that the per-unit profitability is maintained as requested by the plant manager. 2. Calculate the non-value-added cost per unit. Assuming that non-value-added costs can be reduced to zero, can the Tulsa plant match the Kansas City per-unit cost? Can the target cost for expanding market share be achieved? What actions would you take if you were the plant manager? 3. Describe the role that benchmarking played in the effort of the Tulsa plant to protect and improve its competitive position.Variety Artisans has a bottleneck in their production that occurs within the engraving department. Arjun Naipul, the COO, is considering hiring an extra worker, whose salary will be $45,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,500 more units per year. Currently, the selling price per unit is $18 and the cost per unit is $5.85. Using the information provided, calculate the annual financial impact of hiring the extra worker.