Requlred: Calculate the increase or decrease in the operating income in both alternatives.
Q: During a period of steadily increasing purchase costs, whichinventory flow assumption results in the…
A: FIFO method (Firstt in First Out method) : Under this method, the inventory issues will be recorded…
Q: As compared to a traditional income statement format, which of the following terms do not appear on…
A: Where in the traditional income statement, Expenses are categorized in two different categories…
Q: The ratio which indicates the profit that a company makes after paying variable costs of production…
A: Variable costs are those costs which changes with change in level of activity like all operating…
Q: Calculate the accounting rate of return of the new sign. Accounting rate of return %
A: Accounting Rate of Return The accounting rate of return (ARR) formula is helpful in determining the…
Q: When Total Contribution magrin equals total fixed costs, this indicates operating income True…
A: If the contribution margin is equal to the total fixed cost that means it a situation of the…
Q: What is the gross profit? [ Select ] How much is the operating expense? | Select I | Select ] How…
A: Solution:- As per the above questions first we required to compute income statement. which helps to…
Q: A responsibility center structure that considers investments made by the operating segments by using…
A: Residual income means income will receive after completion of the work also. Example : Rental…
Q: List and compare all advantages and disadvantages of Payback Period Rule, Average Accounting Return,…
A: Payback rule: The Payback period is the length of time required to recover the initial cost of a…
Q: 2. Compare the lower of cost or net realizable value effect on each amount that was changed on the…
A: FIFO Cost basis of inventory valuation means inventory has been valued on a first-in, first-out…
Q: Which method results in a more realistic amount for income because it matches the most current costs…
A: The current costs is based on the purchasing of the latest products which means the having book…
Q: How does an “opportunity cost”, subtracting from the revenue of an alternate course of action,…
A: Opportunity cost: Opportunity cost is a loss of income from one alternative if another alternative…
Q: Why would reclassifying period costs as product costs increase this period’s reported earnings?
A:
Q: Can we compute the IRR for each option without knowing the revenue figure? Why?
A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…
Q: What is the most likely impact on return on equity of an increase in operating expense margin, all…
A: Operating expenses are required to run the business. AN increase in operating expenses reduces the…
Q: Assuming no changes in other variables, which of the following would decrease ROA? B . A decrease in…
A: The Return on assets (ROA) shows just how lucrative a business is with respect to its total assets.
Q: The potential percent gain or loss in changes of variable is taken into account by: A present worth…
A: Percent increase or decrease is such a measure of of change of percent which to extent measures…
Q: Does an increase in the operating profitability ratio always causean increase in the value of…
A: Answer: Usually, company’s operating profitability ratio’s measure how far management will strive to…
Q: a) What is the gross margin now? (b) What is the net operating income now? (c) What…
A: Gross margin is the difference between sales and the cost of goods sold. Net operating income is…
Q: Does the accrual accounting rate-of-return method consider income earned throughout a project's…
A: The accrual accounting rate-of-return(ARR) formula splits the average income of an asset by the…
Q: ancial health of the given data b
A: Ratio Analysis - The ratio is the technique used by the prospective investor or an individual or…
Q: Define each of the following terms: c. Net present value (NPV) method; internal rate of return (IRR)…
A: Net present value (NPV) is the contrast between the present value of money inflows over some…
Q: Why is the operating return on assets ratio also referred to as the operating returnon investment?
A: Introduction: Operating asset return is nothing but a profitability measure and it is a difference…
Q: Compute for the following: 1. Accounting rate or return based on the average investment 2. Net…
A: The capital budgeting is a technique that helps to analyze the profitability of the project.
Q: When might a reduction in operating expense as a percentage of sale denote a short term gain or the…
A: Operating expenses are those expenses which are related to the operations of the business. It…
Q: Read the requrements. Requirement 1. If SnowDelight cannot reduce its costs, what profit will it…
A: Variable cost will vary with level of output and fixed cost remain fixed. We need to deduct both…
Q: operating income will increase by
A: Due to increase in sales, only variable expenses would increase. There would be no change in fixed…
Q: Calculate cost base, and capital gain (Loss), and capital gain tax, i
A: Capital gain/loss are the profits or rains arising from the transfer of a capital asset. It is the…
Q: Explain the difference between return of investment versus return on investment.
A: The ratio analysis helps to analyze the financial statements of the business.
Q: Compute the Revenue Effect- Growth Component, indicate if favorable/(unfavorable).
A: The Revenue effect of the Growth component shows the effect of the change in units sold on the…
Q: Which of the following is the indicator of the rate at which company is earning profit? Select one:…
A: Ratio Analysis Each items in the financial statements of an enterprise is compared by using ratio…
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: 1. Prepare an income statement using the a. Net realizable value method b. Reversal cost method
A: Net realizable value refers to the value which is realized upon the sale of assets minus cost…
Q: Yes, because operating income increases.
A: It is pertinent to note that higher the contribution higher the operating income since fixed cost…
Q: What is the difference between cumulative return and annualized return/CAGR). Provide an example
A: There are two methods to measure the rate of return annual basis and cumulative basis.
Q: Use the information provided below to answer the following questions: 3.1 Calculate the total…
A: Marginal income is computed by subtracting the variable cost from the sales. Net profit is…
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: How can we apply Annual-Worth Analysis for the calculation of Unit-Profit or Unit-Cost Calculation?
A: Annual worth analysis is an analysis of value of an investment on an annual basis. It measures the…
Q: Which of the following performance measures will decrease if the minimum required rate of return…
A: Return on investment is the return earned by the investment on its investment. It is computed by…
Q: Assuming no changes in other variables, which of the following would decrease ROA? C . An increase…
A: ROA=NET INCOMEAVERAGE ASSET AVERAGE ASSET IS INVERSELY PROPORTIONAL TO ROA.
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- Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1,800,000; and net loss $240,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,141,200 $633,000 $508,200 Selling expenses 512,800 91,000 421,800 Administrative expenses 146,000 56,000 90,000 $1,800,000 $780,000 $1,020,000 Management is considering the following independent alternatives for 2020. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $204,000 to total salaries of $44,985 plus a 5% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold…Malcolm Lee Industries reported the following amounts in its December 31st financial statements: 2020 2021 Cost of Goods sold $280,000 $287,900 Ending Inventory 55,700 55,700 Errors were made in each year as follows: in 2020, ending inventory was overstated by $10,600 while in 2021, ending inventory was understated by $6,700. Explain the impact of these errors for 2021 profit and owners’ equity. Profits will be by $ . Owners’ equity will be by $ .I. Solve the following problem using MS Excel In many situations, a retailer may not compile a profit or loss statement for individual departments. Suppose that you are a retail buyer, and you decide to recreate the statement for your own department using the following data: Gross sales of $72,300.00, net sales of $60,900.00, opening inventory of $13,900.00, ending inventory of $19,400.00, purchases of $14,000.00, inward freight of 2%, cash discounts of 5%, returns to vendors of $500.00, alterations and workroom costs of 3%, direct expenses of $19,600.00 and total expenses worth $35,000.00, complete the profit or loss statement.(Hint: Remember that freight and cash discount %’s are calculated as % of Purchases, while the alteration/workroom costs % is expressed as % of NS).
- On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance? Foremost Footwear Inc.Product-Line Income StatementFor the Year Ended April 30, 20Y7 Children's Shoes Men's Shoes Women's Shoes Total Sales $165,000 $300,000 $500,000 $965,000 Costs of goods sold: Variable costs $105,000 $150,000 $220,000 $475,000 Fixed costs 32,000 60,000 120,000 212,000 Total cost of goods sold $137,000 $210,000 $340,000 $687,000 Gross profit $28,000 $90,000 $160,000 $278,000 Selling and adminstrative expenses: Variable selling and admin. expenses $21,000 $45,000 $95,000 $161,000 Fixed selling and admin. expenses 17,000 20,000 25,000 62,000 Total selling and admin. expenses $38,000 $65,000 $120,000 $223,000 Income (loss) from…Suppose Grainy Day is considering discontinuing its tasty loops product line. Assume that during the past year, the tasty loops' product line income statement showed the following: A B 1 Sales revenue $7,550,000 2 Less: Cost of goods sold 6,400,000 3 Gross profit 1,150,000 4 Less: Operating expenses 1,650,000 5 Operating income (loss) $(500,000) Fixed manufacturing overhead costs account for 40% of the cost of goods, while only 30% of the operating expenses are fixed. Since the tasty loops line is just one of the company's cereal operations, only $780,000 of direct fixed costs (the majority of which is advertising) will be eliminated if the product line is discontinued. The remainder of the fixed costs will still be incurred by the company. If the company decides to discontinue the product line, what will happen to the company's operating income? Should Grainy Day discontinue the tasty loops product line?Complete this question by entering your answers in the tabs below. Required A Assume that only one product is being sold in each of the four following case situations: (Loss amounts should be indicated by a minus sign.) Case 1 Case 2 Case 3 Case 4 Units sold 8,700 19,200 5,100 Sales $261,000 $300,000 $173,400 Variable expenses 174,000 211,200 Fixed expenses 91,000 174,000 75,000 Net operating income (loss) $6,000 $145,400 $1,500 Contribution margin per unit $12 $12
- Midlands Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 80,000 units of product: net sales $2,000,000; total costs and expenses $2,235,000; and net loss $235,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,568,000 $1,050,000 $518,000 Selling expenses 517,000 92,000 425,000 Administrative expenses 150,000 58,000 92,000 $2,235,000 $1,200,000 $1,035,000 Management is considering the following independent alternatives for 2022. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,000 plus a 5% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50On the basis of the following data, the general manager of Hawkeye Shoes Inc. decided to discontinue Children’s Shoes because it reduced operating income by $30,000. Hawkeye Shoes Inc.Product-Line Income StatementFor the Year Ended November 30, 20Y8 Children's Shoes Men's Shoes Women's Shoes Total Sales $280,000 300,000 $500,000 $1,080,000 Costs of goods sold: Variable costs $(135,000) $(150,000) $(220,000) $(505,000) Fixed costs (45,000) (60,000) (120,000) (225,000) Total cost of goods sold $(180,000) $(210,000) $(340,000) $(730,000) Gross profit $100,000 $90,000 $160,000 $350,000 Selling and administrative expenses: Variable selling and admin. expenses $(100,000) $(45,000) $(95,000) $(240,000) Fixed selling and admin. expenses (30,000) (20,000) (25,000) (75,000) Total selling and admin. expenses $(130,000) $(65,000) $(120,000) $(315,000) Operating income (loss) $(30,000) $25,000 $40,000 $35,000 a.…On the basis of the following data, the general manager of Featherweight Shoes Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $17,000. Labels Cash flows from investing activities Costs Amount Descriptions Fixed costs Gain on sale of investments Income (loss) Loss on sale of investments Revenues Total costs Variable cost of goods sold Variable selling and administrative expenses
- Gigasales Department Store Income Statement For the Year Ended December 31, 2022 Net sales $700,000 Cost of goods sold 560,000 Gross profit 140,000 Operating expenses Selling expenses $100,000 Administrative expenses 20,000 120,000 Net income $ 20,000 Karen believes the problem lies in the relatively low gross profit rate of 20%. Reece believes the problem is that operating expenses are too high. Karen thinks the gross profit rate can be improved by making two…Referring to the situation in P9.2 for Garcia Home Improvement Company, consider the following expanded data at May 31, 2020. Assume Garcia uses LIFO inventory costing. Cost ReplacementCost SalesPrice Net RealizableValue NormalProfit Aluminum siding $ 70,000 $ 62,500 $ 64,000 $ 56,000 $ 5,100 Cedar shake siding 86,000 79,400 94,000 84,800 7,400 Louvered glass doors 112,000 124,000 186,400 168,300 18,500 Thermal windows 140,000 126,000 154,800 140,000 15,400 Total $408,000 $391,900 $499,200 $449,100 $46,400 Instructions a. 1. Determine the proper balance in Allowance to Reduce Inventory to Market at May 31, 2020. 2. For the fiscal year ended May 31, 2020, determine the amount of the gain or loss that would be recorded due to the change in Allowance to Reduce Inventory to Market. Prior to adjustment, the Allowance account had a balance of $27,500. b. Explain the rationale for the use of the lower-of-cost-or-market rule as it…The following is the income statement of Marielle Hotel for the Year ended December 31,2021 Marielle Hotel Income Statement For the Year Ended December 31, 2021 Sales (20,000 units) P300,000 Less: Cost of Goods Sold 180,000 Gross Income 120,000 Less: Selling Price and Administrative Expenses 80,000 Operating Income P40,000 Other Data: 1/3 of the cost of good sold is fixed 75% of the selling and administrative expenses is variable. Required: Compute for the new Income Statement