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- 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.Suppose the company has just the opposite news and now expects unit sales for August, September, and October to be double (200%) the original estimates. What effect will this have on the company’s net income and borrowing? Explain your findings.Using the information in the previous exercises about Marleys Manufacturing, determine the operating income for department B, assuming department A sold department B 1,000 units during the month and department A reduces the selling price to the market price.
- Mason, Durant, and Westbrook (MDW) is a tax services firm. The firm is located in Oklahoma City and employs 15 professionals and eight staff. The firm does tax work for small businesses and well-to-do individuals. The following data are provided for the last fiscal year. (The Mason, Durant, and Westbrook fiscal year runs from July 1 through June 30.) Required: 1. Prepare a statement of cost of services sold. 2. Refer to the statement prepared in Requirement 1. What is the dominant cost? Will this always be true of service organizations? If not, provide an example of an exception. 3. Assuming that the average fee for processing a return is 850, prepare an income statement for Mason, Durant, and Westbrook. 4. Discuss three differences between services and tangible products. Calculate the average cost of preparing a tax return for last year. How do the differences between services and tangible products affect the ability of MDW to use the last years average cost of preparing a tax return in budgeting the cost of tax return services to be offered next year?Lucas Hunter, president of Simmons Industries Inc., believes that reporting operating cash flow per share on the income statement would be a useful addition to the companys just completed financial statements. The following discussion took place between Lucas Hunter and Simmons controller, John Jameson, in January, after the close of the fiscal year: Lucas: Ive been reviewing our financial statements for the last year. I am disappointed that our net income per share has dropped by 10% from last year. This wont look good to our shareholders. Is there anything we can do about this? John: What do you mean? The past is the past, and the numbers are in. There isnt much that can be done about it. Our financial statements were prepared according to generally accepted accounting principles, and I dont see much leeway for significant change at this point. Lucas: No, no. Im not suggesting that we cook the books. But look at the cash flow from operating activities on the statement of cash flows. The cash flow from operating activities has increased by 20%. This is very good newsand, I might add, useful information. The higher cash flow from operating activities will give our creditors comfort. John: Well, the cash flow from operating activities is on the statement of cash flows, so I guess users will be able to see the improved cash flow figures there. Lucas: This is true, but somehow I think this information should be given a much higher profile. I dont like this information being buried in the statement of cash flows. You know as well as I do that many users will focus on the income statement. Therefore, I think we ought to include an operating cash flow per share number on the face of the income statementsomeplace under the earnings per share number. In this way, users will get the complete picture of our operating performance. Yes, our earnings per share dropped this year, but our cash flow from operating activities improved! And all the information is in one place where users can see and compare the figures. What do you think? John: Ive never really thought about it like that before. I guess we could put the operating cash flow per share on the income statement, underneath the earnings per share amount. Users would really benefit from this disclosure. Thanks for the ideaIll start working on it. Lucas: Glad to be of service. How would you interpret this situation? Is John behaving in an ethical and professional manner?The following information is from Daves Sporting Goods. Daves is a Midwest sporting goods store with three regional stores. The August income statement for all stores is shown. A. Comment on the operating income results for each store. B. Now assume the costs allocated from corporate is an uncontrollable cost for each store. How does this change your assessment of each store?
- ZNet Co. is a web-based retail company. The company reports the following for the past year. The company’s CEO believes that sales for next year will increase by 20% and both profit margin (%) and the level of average invested assets will be the same as for the past year. 1. Compute return on investment for the past year. 2. Compute profit margin for the past year. 3. If the CEO’s forecast is correct, what will return on investment equal for next year? 4. If the CEO’s forecast is correct, what will investment turnover equal for next year? Sales . $5,000,000 Operating income . $1,000,000 Average invested assets . $12,500,000Assume that you are one of the owners of Pinoy Corporation. Upon reviewing the project income statements as shown in Tables 7.3 and 7.4 you realized that salaries are understated because it only accounts for the 12 months of salary of each employee and does not include the 13th month pay, which is required by law. You also feel that cost of goods sold ought to be computed at 45% instead of 40% of salles revenues. Using a spreadsheet program, revise the projected income statements for the first year and the first three years of the business.Starborn Company has just been established as a new company to manufacture furniture. The company expects to earn $1 million after-taxes during its first year. The company president has asked for a projected balance sheet based on ratios similar to the industry average. Assuming all sales are made on credit, calculations utilize a 365-day year, and final numbers are rounded to the nearest thousand, prepare a projected balance sheet for Starborn based on the following industry ratios: Current Ratio: 2:1 Quick Ratio: 1:1 Net Profit Margin: 10% Average Collection Period: 20 days Debt Ratio: 40% Total Asset Turnover Ratio: 2 times Current Liabilities/Stockholder's Equity: 20% Create your balance sheet based on the following format: Cash Total Current Liabilities Accounts Receivable Long-term Debt Inventory Total Debt Total Current Assets Stockholder's Equity Net Fixed Assets Total Liabilities and…
- Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. Pretax income ? Gross profit ? Allocated costs (uncontrollable) $2,030 Labor expense 41,590 Sales 189,000 Research and development (uncontrollable) 320 Depreciation expense 18,000 Net income/(loss) ? Cost of goods sold 119,070 Selling expense 1,250 Total expenses ? Marketing costs (uncontrollable) 780 Administrative expense 700 Income tax expense (21% of pretax income) ? Other expenses 310 A. Prepare the income statement to include all costs, but separate out uncontrollable costs using the above information. Round your answers to the nearest dollar. BDS Enterprises Income Statement For the Year Ended December…Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. Pretax income ? Gross profit ? Allocated costs (uncontrollable) $2,030 Labor expense 41,580 Sales 190,000 Research and development (uncontrollable) 310 Depreciation expense 18,000 Net income/(loss) ? Cost of goods sold 119,700 Selling expense 1,260 Total expenses ? Marketing costs (uncontrollable) 800 Administrative expense 690 Income tax expense (21% of pretax income) ? Other expenses 330 Question Content Area A. Prepare the income statement using the above information. Round your answers to the nearest dollar. BDS EnterprisesIncome StatementFor the Year Ended Dec. 31, 20xx $Sales Cost of Goods Sold…Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. Pretax income ? Gross profit ? Allocated costs (uncontrollable) $2,030 Labor expense 41,570 Sales 190,000 Research and development (uncontrollable) 310 Depreciation expense 17,000 Net income/(loss) ? Cost of goods sold 119,700 Selling expense 1,240 Total expenses ? Marketing costs (uncontrollable) 790 Administrative expense 680 Income tax expense (21% of pretax income) ? Other expenses 320 Question Content Area A. Prepare the income statement using the above information. Round your answers to the nearest dollar. BDS EnterprisesIncome StatementFor the Year Ended Dec. 31, 20xx $- Select - - Select -…