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a.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which they can be transform into finish good and raw material which is a means of production. Inventory is also classified as current asset in the
To determine:the current and proposed condition of company’s inventory turnover.
b.
Introduction:
Inventory is a record of finished goods of a company which they can sell to the customer, work in progress which they can be transform into finish good and raw material which is a means of production. Inventory is also classified as current asset in the balance sheet and it is valued by FIFO, LIFO,specific identification and weighted average method.
To determine:the current merits of proposed analysis of inventory turnover.
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Chapter 5 Solutions
Gen Combo Ll Financial Accounting: Information For Decisions; Connect Ac
- Ethics and Revenue Recognition Alan Spalding is CEO of a large appliance wholesaler. Alan is under pressure from Wall Street Analysts to meet his aggressive sales revenue growth projections. Unfortunately, near the end of the year he realizes that sales must dramatically improve if his projections are going to be met. To accomplish this objective, he orders his sales force to contact their largest customers and offer them price discounts if they buy by the end of the year. Alan also offered to deliver the merchandise to a third-party warehouse with whom the customers could arrange delivery when the merchandise was needed. Required: Do you believe that revenue from these sales should be recognized in the current year? Why or why not?arrow_forwardNote that Barbaras Bistro in Figure 1-2 prepares monthly performance reports. Do you think that it would be a good idea for Barbara to switch to just an annual performance report in an effort to reduce its accounting costs?arrow_forwardIn some business models, like restaurants, revenue determines expenses. For example, a restaurant owner may find that labor and food costs should each be 30% of total revenue for the business model to work. As you run your business over time, you'll see certain patterns and limitations (e.g. cafes only have a certain number of seats) -- patterns in revenue to determine expenses. Please review and analyze the Financial Statement Model and explain each component in Dark Blue Such as % Growth per month, Revenue, Expenses, Operating Cash Flow, etc.arrow_forward
- A manager in your organization just received a special order at a price that is “below cost.” The manager points to the document and says, “These are the kinds of orders that will get you in trouble. Every sale must bear its share of the full costs of running the business. If we sell below our full cost, we'll be out of business in no time.” What do you think of this remark?arrow_forwardDownload and fill out the Section 5 Comprehensive Problem Template attached below to complete the problems (ignore question 5-2 as this applies to the "combined accounting and finance" course). Problem 5-1 Redlands Inc. sells one product for $5. The variable cost per item is $3, and the fixed costs for the firm are $40. Required: a. Compute the breakeven point in units. b. Compute the number of units and sales revenue needed to achieve a $20 profit. (Ignore income taxes.) c. Assume that the income tax rate for Redlands is 40%. Compute the number of units and sales revenue needed to achieve an $18 net profit. d. Compute the number of units and sales revenue needed to achieve an 8% profit margin. (Ignore income taxes.) e. Compute the number of units and sales revenue needed to achieve a 12% net profit margin. (Assume a 40% income tax rate.) f. Assume that Redlands currently sells 40 units. Redlands estimates that if it increased sales price to $6 per unit demand would decrease by…arrow_forwardThe success of a business depends on many things. For example, you are the senior manager of the ABC Hypermarket, Explain Mr. Said, the new manager how to understand the customers and the competition. In addition also explain control costs and how to price their products and services. Explain Mr. Said about Markup & Margin with the following situations. Required: (a) Situation 1: Calculating OMR amount of markup and percent markup on cost. Signature" jeans cost, OMR 1800. Signature" jeans selling price OMR 2300. (b) Situation 2: Calculating selling price based on following information. Lamp cost, OMR200. 40% markup on selling price (c) Situation 3: Calculating cost based on following information Tennis racket selling price OMR 800 40% markup on costarrow_forward
- Fisk Corporation is trying to improve its inventory control system and has installed an online computer at its retail stores. Fisk anticipates sales of 60,500 units per year, an ordering cost of $12 per order, and carrying costs of $1.20 per unit.a. What is the economic ordering quantity?___________Units b. How many orders will be placed during the year? __________Orders c. What will the average inventory be? ____________Units d. What is the total cost of ordering and carrying inventory? $____________arrow_forwardDirection: Read the following independent cases given below. Provide necessary answer for all issues being asked. Provide a separate answer sheet for all your specific answers. A. The DIGITAL Company provided you with the following comparative Income Statement for your analysis. He wants you to enlighten the management on why the net profit decline. Sales Cost of Sales Gross Margin Operating Expenses Net Profit 2020 P680,000 170,000 P510,000 210,000 P300000 2021 P 570,000 200,000 P 370,000 100,000 P 270.000 Required: 1. Using Horizontal Analysis, calculate the peso change and the percentage changes. 2. Using Vertical Analysis, prepare the comparative common-size Income Statements. 3. Evaluate the results of your Analysis and explain to the management why the net profit declined.arrow_forwardRefer to the information for Jasper Company on the previous page.Required:1. Prepare an income statement for Jasper for last year. Calculate the percentage of sales for eachline item on the income statement. (Note: Round percentages to the nearest tenth of a percent.)2. CONCEPTUAL CONNECTION Briefly explain how a manager could use the incomestatement created for Requirement 1 to better control costs.arrow_forward
- Consider the following information for a given business. Sale revenue =GHS40,000 VC per unit =GHS20 Activity level =1,000 to break even Required: 1. Determine the TFC 2. Express the contribution as a percentage of sale. 3. The company plans to sale 1,500 unit in the next period. What will be the percentage margin of safety (MoS) 4. What margin should the business employ for planning purposes? 5. What total profit should the business expect in order to achieve it's planned sales?arrow_forwardChart included in screenshot as well as prior analysis** CVP analysis is used to analyze the effects of changes in selling prices, costs and volume on profits. It is also used to determine target profit, the margin of safety, operating leverage, product mix and choosing among marketing strategies and others. Suppose Byron management has a target operating income of $3,000. Assume the same costs as above and the sell price remains at $24 per unit. 1. How many units does Byron need to sell to meet this goal? _______ units 2. What is Byron's margin of safety in sales and in units when Byron sells 730 units? Margin of safety in sales $_________ Margin of safety in units ________ units 3. What is the degree of operating leverage when 730 units are sold? If required, round your answer to two decimal places. ___________arrow_forwardComputing breakeven sales and sales needed to earn a target profit; graphing CVP relationships; performing sensitivity analysis National Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,100), depreciation on office furniture ($1,700), utilities ($2,000), special telephone lines ($1,500), a connection with an online brokerage service ($2,500), and the salary of a financial planner ($5,200). Variable costs include payments to the financial planner (9% of revenue), advertising (11% of revenue), supplies and postage (4% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Requirements Use the contribution margin ratio approach to compute Nationals breakeven revenue in dollars. If the average trade leads to $1,000 in revenue for National, how many trades must be made to break even? Use the equation approach to compute the dollar revenues needed to earn a monthly target profit of $12,600.…arrow_forward
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