Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether. Data from the company's budget for the upcoming year appear below: Sales Variable expenses $ 730,000 $ 350,000 $ 234,000 $ 161,000 Fixed manufacturing expenses Fixed selling and administrative expenses In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be: $15,000 $143,000 ($143,000) O ($15,000)
Q: Which of the following is not a financial statement? O Bank statement Income statement Balance sheet…
A: Financial statement includes 1) Balance sheet 2) income tax 3) cash flow statement 4) statement of…
Q: Exercise 10-5 Working Backwards from Labor Variances [LO10-2] The auto repair shop of Quality Motor…
A: Working Notes: Calculation of Standard Labor hours allowed for Actual output Standard labor hours…
Q: In its 2021 statement of retained earnings, what amount should Tricky report as the effect of this…
A: As per IAS 8, Accounting policies, changes in Accounting estimates and errors A change in inventory…
Q: lata Corpora declaration e of its exec
A: GIVEN Delata Corporation bought a condominium unit P6,000,0000. property per tax declaration is…
Q: Which of the following is not a potential entity level tax for an S corporation that was formerly a…
A: The S Corporation is one of the constitution in US Taxation along with C Corporation. S Corporation…
Q: October 3 Wrote off a $1,500 balance due from a customer who went bankrupt. December 29 Recorded…
A: While preparing closing Entry for Income statement accounts, all the Revenues and Expenses are…
Q: Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual…
A: Introduction: Journals: Recording of a business transactions in a chronological order. Each and…
Q: How would a Dividend that is declared but not yet paid be treated at year end for financial…
A: Dividends are the amounts which are paid in consideration to the amount contributed in the company.…
Q: hey relate to each other and/or how they both relate to specific challenges in economic development:…
A: Introduction: Industrial policy is the policy which are framed by the government in order to get…
Q: b Company, a lessor of office machines, purchased a new machine for P 150,000 on January 1, 2020,…
A: Lease gives the right to use the assets by payment of periodic payment during the lease period and…
Q: orporation purchased under the executive's a mot name w much is the fringe benefits
A: Introduction: The benefits which are provided by the employer which acts as job satisfaction to…
Q: Required information Problem 9-5A (Static) Computing and analyzing times interest earned LO A1 [The…
A: The ability to pay interest is measured by Times Interest ratio. Higher the ratio the better will be…
Q: A business purchases a vehicle for $35,000. Since the vehicle was advertised for $40,000 the company…
A: Introduction:- Accounting principles are the rules and guidelines that companies must follow at the…
Q: gageNOWv2 | Online teachin X +…
A: Solution.. Finished goods = $326,200 Total manufacturing costs incurred = Finished goods +…
Q: Profitability Ratios The following information has been gathered for Malette Manufacturing: Net…
A: Solution:- 1)Computation of the return on assets as follows under:- It measures a company's…
Q: Develop a personal cash budget for the next six months. Explain what you would do if there are…
A: A cash budget plan is an estimate of a company's earnings over a specific time period. This budget…
Q: People with an indirect interest in a business would use report based on GAAP. TRUE or FALSE?
A: The persons including individuals and institutions have either direct or indirect interest in the…
Q: On July 1, 2022, Jenks Company purchased the copyright to Jackson Computer tutorials for $216,000.…
A: Amortization is the reduction in the worth of intangible assets over a period of its useful life.
Q: II. Directions: Problem Solving: Prepare Trial Balance for the accounts of Corny Enterprises as of…
A: A trial balance seems to be a statement that shows the sums, or totals of debits as well as credits,…
Q: Recording Entries for Restricted stock Share Award Plan Restricted stock awards for 7,000 shares of…
A: Journal Entry It is the basic process of accounting work to enter the required transaction into…
Q: A credit report keeps track of money you borrow from banks, credit card companies, and other…
A: Loan means the amount taken from another person to be repaid back with interest.
Q: P company paid $3,600,000 in cash, to acquire 90%of S company on January 1, 2014. The total…
A:
Q: In packages of its products, Kristine Company includes coupons that may be presented at retail…
A: Liabilities are classified as: Current liabilities Non-Current liabilities Current Liabilities-…
Q: The following information is about the cash balances for Mooner Sooner Inc.: Company balance: $5,020…
A: The bank reconciliation statement is prepared to balance the passbook and company book accounts with…
Q: A corporation has the following account balances at December 31, 2019: Accounts Payable $2,500…
A: Retained earnings are the balance of accumulated profit earned during the life of the business after…
Q: For items 22 to 24: The Warner Company sells its only pro the variable costs amount to P21 per unit.…
A: Break even point means the situation where there is no profit no loss. It means that a point where…
Q: River Textile Mill was inspected by OSHA and found to be in violation of a number of safety…
A: The answer has been mentioned below.
Q: Do you believe that the events immediately following GM's bankruptcy alleviated the concerns that…
A: Answer:- In the annual report of the GM. The corporation is recurring losses from the operations,…
Q: Suppose the economy is in a recession and the government is running a budget surplus. This implies…
A: budget surplus when there is more income than expenditure a surplus is indication that the…
Q: Shilongo Ltd uses costing to attribute costs to individual products and services provided to its…
A: Simultaneous Equation Method: This is a method of allocation of Service Departments Overheads Cost…
Q: 17. Jolo Corporation wants to revise the sales commission payment scheme. Currently, the 4 sales…
A: Lets understand the basics. For calculating indifference point between two option we need to use…
Q: In the year 2020, kim plastics sold 100,000 units of its product. Selling price per unit was 100.…
A: Formula: Operating income: Deduction of variable costs and fixed costs from the sales revenue…
Q: Using the following information, prepare a bank reconciliatio Bank balance: $7,651 Book balance:…
A: The practice of comparing the balances in such an institution's account holder account to the…
Q: On December 31, 2021, Maroon Co. leased an equipment with a cost of P2,000,000 to Green Co. for…
A: As per IFRS 16, Leases, Lessor will recognize Net investment in lease on lease commencement date…
Q: X CengageNOWv2 | Online teachin X +…
A: Solution... Current assets = Accounts payable + accrued liability + note payable = $32,558 +…
Q: I More info a. Cash collections from services in July, August, and September, are projected to be…
A: Budgeting - Budgeting is the process of estimating future operations based on past performance. %…
Q: Complete the information in the cost computations shown here: Raw materials Beginning inventory…
A: Solution:- Completion of the information in the cost computations as follows under:-
Q: pls prepare journal entries
A: The transaction of Kassey company for the first year of operations is given to us. Journal entries…
Q: Zoe Corporation has the following information for the month of March. Cost of materials used in…
A: GIVEN Cost of direct materials used in production $16,958 Direct labor $27,539 Factory overhead…
Q: Myro Company leased a new machine from Myie Corp. on May 1, 2014 under a lease with the following…
A: The question is based on the concept of Lease Accounting.
Q: Why would Commodore’s auditor insist that Rob document any sales booked under the book-and-hold…
A: An auditor is someone who verifies the accuracy of recorded commercial transactions. Auditors are…
Q: Which of the following cannot be characterized as a guaranteed payment to a partner? A specified…
A: When two or more parties agree to manage and operate a business by sharing profits and losses in the…
Q: A comparative balance sheet and income statement is shown for Cruz, Incorporated. CRUZ, INCORPORATED…
A: The cash flow statement is prepared to record cash flow from various activities during the period…
Q: Customer payments received in advance of the product or service being provided is recorded in which…
A: The company can collect advance from the customer before sale of the goods this method of collection…
Q: requires alue of money at machinery for $86- value. Cougar d anged the machin
A: Given: Cougar to pay 100,000 identical piece of machinery $86,000 Cougar paid=$10,000 fair…
Q: drive at Php 320 is equal to 7/5th of the profit obtained by selling the same flash drive at Php…
A: The cost price can be calculated by comparing the profits under the two alternatives.
Q: Ravenna Company is a merchandiser that uses the indirect method to prepare the operating activities…
A:
Q: Jo Angel Company sells its products in reusable, expensive containers. The customer is charged a…
A: Returnable container deposits received from customers are recognised as financial liability as a…
Q: During the year ended December 31, 2021, Angel Company revealed the following events: a) A counting…
A: The amount of retained earnings fluctuates form year to year with changes in income, dividends or…
Q: On December 31, 2021, Maroon Co. leased an equipment with a cost of P2,000,000 to Green Co. for…
A: Residual value is of two types-one is guaranteed residual value and the other is unguaranteed…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Katayama Company produces a variety of products. One division makes neoprene wetsuits. The divisions projected income statement for the coming year is as follows: Required: 1. Compute the contribution margin per unit, and calculate the break-even point in units. Repeat, using the contribution margin ratio. 2. The divisional manager has decided to increase the advertising budget by 140,000 and cut the average selling price to 200. These actions will increase sales revenues by 1 million. Will this improve the divisions financial situation? Prepare a new income statement to support your answer. 3. Suppose sales revenues exceed the estimated amount on the income statement by 612,000. Without preparing a new income statement, determine by how much profits are underestimated. 4. How many units must be sold to earn an after-tax profit of 1.254 million? Assume a tax rate of 34 percent. (Round your answer up to the next whole unit.) 5. Compute the margin of safety in dollars based on the given income statement. 6. Compute the operating leverage based on the given income statement. (Round to three significant digits.) If sales revenues are 20 percent greater than expected, what is the percentage increase in profits?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.Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $55,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,000 more units per year. Currently, the selling price per unit is $25 and the cost per unit is $7.85. Using the information provided, calculate the annual financial impact of hiring the extra worker.
- Handbrain Inc. is considering a change to activity-based product costing. The company produces two products, cell phones and tablet PCs, in a single production department. The production department is estimated to require 2,000 direct labor hours. The total indirect labor is budgeted to be 200,000. Time records from indirect labor employees revealed that they spent 30% of their time setting up production runs and 70% of their time supporting actual production. The following information about cell phones and tablet PCs was determined from the corporate records: a. Determine the indirect labor cost per unit allocated to cell phones and tablet PCs under a single plantwide factory overhead rate system using the direct labor hours as the allocation base. b. Determine the budgeted activity costs and activity rates for the indirect labor under activity-based costing. Assume two activitiesone for setup and the other for production support. c. Determine the activity cost per unit for indirect labor allocated to each product under activity-based costing. d. Why are the per-unit allocated costs in (a) different from the per-unit activity cost assigned to the products in (c)?Cost-Volume-Profit, Margin of Safety Victoria Company produces a single product. Last years income statement is as follows: Required: 1. Compute the break-even point in units and sales dollars calculated using the break-even units. 2. What was the margin of safety for Victoria last year in sales dollars? 3. Suppose that Victoria is considering an investment in new technology that will increase fixed cost by 250,000 per year but will lower variable costs to 45% of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming that Victoria makes this investment. What is the new break-even point in sales dollars, assuming that the investment is made?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.
- Kimball Company has developed the following cost formulas: Materialusage:Ym=80X;r=0.95Laborusage(direct):Yl=20X;r=0.96Overheadactivity:Yo=350,000+100X;r=0.75Sellingactivity:Ys=50,000+10X;r=0.93 where X=Directlaborhours The company has a policy of producing on demand and keeps very little, if any, finished goods inventory (thus, units produced equals units sold). Each unit uses one direct labor hour for production. The president of Kimball Company has recently implemented a policy that any special orders will be accepted if they cover the costs that the orders cause. This policy was implemented because Kimballs industry is in a recession and the company is producing well below capacity (and expects to continue doing so for the coming year). The president is willing to accept orders that minimally cover their variable costs so that the company can keep its employees and avoid layoffs. Also, any orders above variable costs will increase overall profitability of the company. Required: 1. Compute the total unit variable cost. Suppose that Kimball has an opportunity to accept an order for 20,000 units at 220 per unit. Should Kimball accept the order? (The order would not displace any of Kimballs regular orders.) 2. Explain the significance of the coefficient of correlation measures for the cost formulas. Did these measures have a bearing on your answer in Requirement 1? Should they have a bearing? Why or why not? 3. Suppose that a multiple regression equation is developed for overhead costs: Y = 100,000 + 100X1 + 5,000X2 + 300X3, where X1 = direct labor hours, X2 = number of setups, and X3 = engineering hours. The coefficient of determination for the equation is 0.94. Assume that the order of 20,000 units requires 12 setups and 600 engineering hours. Given this new information, should the company accept the special order referred to in Requirement 1? Is there any other information about cost behavior that you would like to have? Explain.Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)Cost Classification, Income Statement Gateway Construction Company, run by Jack Gateway, employs 25 to 30 people as subcontractors for laying gas, water, and sewage pipelines. Most of Gateways work comes from contracts with city and state agencies in Nebraska. The companys sales volume averages 3 million, and profits vary between 0 and 10% of sales. Sales and profits have been somewhat below average for the past 3 years due to a recession and intense competition. Because of this competition, Jack constantly reviews the prices that other companies bid for jobs. When a bid is lost, he analyzes the reasons for the differences between his bid and that of his competitors and uses this information to increase the competitiveness of future bids. Jack believes that Gateways current accounting system is deficient. Currently, all expenses are simply deducted from revenues to arrive at operating income. No effort is made to distinguish among the costs of laying pipe, obtaining contracts, and administering the company. Yet all bids are based on the costs of laying pipe. With these thoughts in mind, Jack looked more carefully at the income statement for the previous year (see below). First, he noted that jobs were priced on the basis of equipment hours, with an average price of 165 per equipment hour. However, when it came to classifying and assigning costs, he needed some help. One thing that really puzzled him was how to classify his own 114,000 salary. About half of his time was spent in bidding and securing contracts, and the other half was spent in general administrative matters. Required: 1. Classify the costs in the income statement as (1) costs of laying pipe (production costs), (2) costs of securing contracts (selling costs), or (3) costs of general administration. For production costs, identify direct materials, direct labor, and overhead costs. The company never has significant work in process (most jobs are started and completed within a day). 2. Assume that a significant driver is equipment hours. Identify the expenses that would likely be traced to jobs using this driver. Explain why you feel these costs are traceable using equipment hours. What is the cost per equipment hour for these traceable costs?
- Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Companys controller prepared the following budgeted income statement for the coming year: Required: 1. What is Arbergs variable cost ratio? What is its contribution margin ratio? 2. Suppose Arbergs actual revenues are 30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement 3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. 4. What is Arbergs expected margin of safety? 5. What is Arbergs margin of safety if sales revenue is 380,000?Shannon, Inc., has two divisions. One produces and sells paper party supplies (napkins, paper plates, invitations); the other produces and sells cookware. A segmented income statement for the most recent quarter is given below: On seeing the quarterly statement, Madge Shannon, president of Shannon, Inc., was distressed and discussed her disappointment with Bob Ferguson, the companys vice president of finance. MADGE: The Party Supplies Division is killing us. Its not even covering its own fixed costs. Im beginning to believe that we should shut down that division. This is the seventh consecutive quarter it has failed to provide a positive segment margin. I was certain that Paula Kelly could turn it around. But this is her third quarter, and she hasnt done much better than the previous divisional manager. BOB: Well, before you get too excited about the situation, perhaps you should evaluate Paulas most recent proposals. She wants to spend 10,000 per quarter for the right to use familiar cartoon figures on a new series of invitations, plates, and napkins and at the same time increase the advertising budget by 25,000 per quarter to let the public know about them. According to her marketing people, sales should increase by 10 percent if the right advertising is doneand done quickly. In addition, Paula wants to lease some new production machinery that will increase the rate of production, lower labor costs, and result in less waste of materials. Paula claims that variable costs will be reduced by 30 percent. The cost of the lease is 95,000 per quarter. Upon hearing this news, Madge calmed considerably and, in fact, was somewhat pleased. After all, she was the one who had selected Paula and had a great deal of confidence in Paulas judgment and abilities. Required: 1. Assuming that Paulas proposals are sound, should Madge Shannon be pleased with the prospects for the Party Supplies Division? Prepare a segmented income statement for the next quarter that reflects the implementation of Paulas proposals. Assume that the Cookware Divisions sales increase by 5 percent for the next quarter and that the same cost relationships hold. 2. Suppose that everything materializes as Paula projected except for the 10 percent increase in salesno change in sales revenues takes place. Are the proposals still sound? What if the variable costs are reduced by 40 percent instead of 30 percent with no change in sales?Artic Camping Gears currently sells 35,000 units at $73 per unit. Its expenses are as follows: Management believes it can increase sales by 2,000 units for every $5 decrease in sales price. It also believes the additional sales will allow a decrease in direct material of $1 for each additional 2,000 units. Prepare a flexible budgeted income statement for 35,000-, 37,000-, and 39,000-unit sales.