Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Question
Chapter 2, Problem 26BEA
1.
To determine
Make an income statement for the previous month.
2.
To determine
Describe the reason that the company has no line item for the cost of goods sold (COGS).
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Income Statements Segmented by TerritoryScript, Inc., has two product lines. The September income statements of each product line and the company are as follows:
SCRIPT, INC.Product Line and Company Income StatementsFor Month of September
Pens
Pencils
Total
Sales
$25,000
$30,000
$55,000
Less variable expenses
(10,000)
(12,000)
(22,000)
Contribution margin
15,000
18,000
33,000
Less direct fixed expenses
(9,000)
(8,000)
(17,000)
Product margin
$6,000
$10,000
$16,000
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(6,000)
Net income
$10,000
Pens and pencils are sold in two territories, Florida and Alabama, as follows:
Florida
Alabama
Pen sales
$14,000
$11,000
Pencil sales
4,000
26,000
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$18,000
$37,000
The preceding common fixed expenses are traceable to each territory as follows:
Florida fixed expenses
$2,000
Alabama fixed expenses
3,000
Home office administration fixed expenses
1,000
Total common fixed expenses
$6,000
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Ieso Corporation has two stores: J and K. During November, Ieso Corporation reported a net operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses are $60,000 in Store J, and $40,000 in Store K.
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Income Statements Segmented by TerritoryScript, Inc., has two product lines. The September income statements of each product line and the company are as follows:
SCRIPT, INC.Product Line and Company Income StatementsFor Month of September
Pens
Pencils
Total
Sales
$25,000
$30,000
$55,000
Less variable expenses
(10,000)
(12,000)
(22,000)
Contribution margin
15,000
18,000
33,000
Less direct fixed expenses
(8,000)
(6,000)
(14,000)
Product margin
$7,000
$12,000
$19,000
Less common fixed expenses
(6,000)
Net income
$13,000
Pens and pencils are sold in two territories, Florida and Alabama, as follows:
Florida
Alabama
Pen sales
$11,000
$14,000
Pencil sales
13,000
17,000
Total sales
$24,000
$31,000
The preceding common fixed expenses are traceable to each territory as follows:
Florida fixed expenses
$2,000
Alabama fixed expenses
3,000
Home office administration fixed expenses
1,000
Total common fixed expenses
$6,000
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Chapter 2 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 2 - Explain the difference between cost and expense.Ch. 2 - What is the difference between accumulating costs...Ch. 2 - What is a cost object? Give some examples.Ch. 2 - What is a direct cost? An indirect cost? Can the...Ch. 2 - What is allocation?Ch. 2 - What is the difference between a product and a...Ch. 2 - Define manufacturing overhead.Ch. 2 - Explain the difference between direct materials...Ch. 2 - Define prime cost and conversion cost. Why cant...Ch. 2 - How does a period cost differ from a product cost?
Ch. 2 - Define selling cost. Give five examples of selling...Ch. 2 - What is the cost of goods manufactured?Ch. 2 - What is the difference between cost of goods...Ch. 2 - What is the difference between the income...Ch. 2 - Why do firms like to calculate a percentage column...Ch. 2 - Accumulating costs means that a. costs must be...Ch. 2 - Product (or manufacturing) costs consist of a....Ch. 2 - Use the following information for Multiple-Choice...Ch. 2 - Prob. 4MCQCh. 2 - The accountant in a factory that produces biscuits...Ch. 2 - Which of the following is an indirect cost? a. The...Ch. 2 - Prob. 7MCQCh. 2 - Kelloggs makes a variety of breakfast cereals....Ch. 2 - Prob. 9MCQCh. 2 - Stone Inc. is a company that purchases goods...Ch. 2 - JackMan Company produces die-cast metal bulldozers...Ch. 2 - Prob. 12MCQCh. 2 - Use the following information for Multiple-Choice...Ch. 2 - Use the following information for Multiple-Choice...Ch. 2 - Use the following information for Multiple- Choice...Ch. 2 - Prob. 16MCQCh. 2 - Use the following information for Multiple-Choice...Ch. 2 - 2-18 Use the following information for Multiple-...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Direct Materials Used in Production Slapshot...Ch. 2 - Cost of Goods Manufactured Slapshot Company makes...Ch. 2 - Cost of Goods Sold Slapshot Company makes ice...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Prob. 26BEACh. 2 - Prob. 27BEBCh. 2 - Prob. 28BEBCh. 2 - Direct Materials Used in Production Morning Smiles...Ch. 2 - 2-30 Cost of Goods Manufactured Morning Smiles...Ch. 2 - Cost of Goods Sold Morning Smiles Coffee Company...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercise:...Ch. 2 - Service Organization Income Statement Healing...Ch. 2 - Prob. 35ECh. 2 - Products versus Services, Cost Assignment Holmes...Ch. 2 - Assigning Costs to a Cost Object, Direct and...Ch. 2 - Total and Unit Product Cost Martinez Manufacturing...Ch. 2 - Cost Classification Loring Company incurred the...Ch. 2 - Classifying Cost of Production A factory...Ch. 2 - Use the following information for Exercises 2-41...Ch. 2 - Use the following information for Exercises 2-41...Ch. 2 - Direct Materials Used Hannah Banana Bakers makes...Ch. 2 - Cost of Goods Sold Allyson Ashley makes jet skis....Ch. 2 - Use the following information for Exercises 2-45...Ch. 2 - Use the following information for Exercises 2-45...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Understanding the Relationship between Cost Flows,...Ch. 2 - Manufacturing, Cost Classification, Product Costs...Ch. 2 - Cost Assignment, Direct Costs Harry Whipple, owner...Ch. 2 - Cost of Direct Materials, Cost of Goods...Ch. 2 - Preparation of Income Statement: Manufacturing...Ch. 2 - Cost of Goods Manufactured, Cost of Goods Sold...Ch. 2 - Cost Identification Following is a list of cost...Ch. 2 - Income Statement, Cost of Services Provided,...Ch. 2 - Cost of Goods Manufactured, Income Statement W. W....Ch. 2 - Cost Definitions Luisa Giovanni is a student at...Ch. 2 - Cost Identification and Analysis, Cost Assignment,...Ch. 2 - Cost Analysis, Income Statement Five to six times...Ch. 2 - Cost Classification, Income Statement Gateway...Ch. 2 - Cost Information and Ethical Behavior, Service...
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