INTERMEDIATE ACCOUNTING (LCPO)
10th Edition
ISBN: 9781264473441
Author: SPICELAND
Publisher: MCG
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Textbook Question
Chapter 6, Problem 6.23BE
Estimating stand-alone selling prices; residual approach
• LO5–6
O’Hara Associates sells golf clubs, and with each sale of a full set of clubs provides complementary club-fitting services. A full set of clubs with the fitting services sells for $1,500. O’Hara sells the same clubs without the fitting service for $1,400. Assuming that the golf clubs and the club-fitting services are separate performance obligations, estimate the stand-alone selling price of the club fitting services using the residual approach.
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PROBLEM 8. The Color Company manufactures and sells two
products. The selling prices and variable costs of the products
are as follows:
Blujets Blupens
P20
Selling prices
Variable costs
P40
8
24
The sales for 2021 were in the ratio of 3 Blujets to 1 Blupen.
Sales volume for 2021 was P1 million. Fixed costs for 2020
amounted to P390,000.
Requirements:
4. If the sales mix was to change to 2 units of blujets to 1 unit
of Blupen, would this have any effect on the breakeven
sales? If so, what would be the new breakeven sales?
5. Assuming that the sales volume would remain at P1
million, what net income would be generated using the
sales mix in number (4) above?
6. What sales revenue would be required if the firm wishes to
generate a net income of P328,900 if the original mix of 3:1
prevailed?
QUESTION 1
If the mark-up on cost is 20%, please and the selling price(Excl. VAT) is R600, which of the following amounts is the correct Cost Price(Excl. VAT)?
O A. R100
OB. R580
O C. R575
O D. R500
QUESTION 2
Which one of the following statements with respect to VAT is false?
O A. There is no indication of a VAT charge next to zero-rated item listed on an invoice.
O B. In general, no input VAT claim is allowed by SARS on the purchase of a double-cab delivery vehicle.
O C. The buyer of zero rated supplies will not get any refund from SARS for buying usch an item.
O D. If a vendor sells only VAT exempt supplies, it may not register for VAT.
PROBLEM 8. The Color Company manufactures and sells two
products. The selling prices and variable costs of the products
are as follows:
Blujets
Blupens
Selling prices
Variable costs
P20
P40
8
24
The sales for 2021 were in the ratio of 3 Blujets to 1 Blupen.
Sales volume for 2021 was P1 million. Fixed costs for 2020
amounted to P390,000.
Requirements:
1. Compute the number of units sold in 2021 for each
product.
2. Compute the breakeven sales in pesos and in units.
3. Compute the composite breakeven for the company.
Chapter 6 Solutions
INTERMEDIATE ACCOUNTING (LCPO)
Ch. 6 - What are the five key steps a company follows to...Ch. 6 - What indicators suggest that a performance...Ch. 6 - What criteria determine whether a company can...Ch. 6 - We recognize service revenue either at one point...Ch. 6 - What characteristics make a good or service a...Ch. 6 - Prob. 6.6QCh. 6 - What must a contract include for the contract to...Ch. 6 - How might the definition of probable affect...Ch. 6 - When a contract includes an option to buy...Ch. 6 - Prob. 6.10Q
Ch. 6 - Prob. 6.11QCh. 6 - Is a customers right to return merchandise a...Ch. 6 - Prob. 6.13QCh. 6 - Under what circumstances should sellers consider...Ch. 6 - When should a seller view a payment to its...Ch. 6 - What are three methods for estimating stand-alone...Ch. 6 - When is revenue recognized with respect to...Ch. 6 - In a franchise arrangement, what are a franchisors...Ch. 6 - When does a company typically recognize revenue...Ch. 6 - Prob. 6.20QCh. 6 - Prob. 6.21QCh. 6 - Prob. 6.22QCh. 6 - Must bad debt expense be reported on its own line...Ch. 6 - Explain the difference between contract assets,...Ch. 6 - Explain how to account for revenue on a long-term...Ch. 6 - Prob. 6.26QCh. 6 - Prob. 6.27QCh. 6 - Timing of revenue recognition LO53 Estate...Ch. 6 - Allocating the transaction price LO54 Sarjit...Ch. 6 - Existence of a contract LO5-5 Tulane Tires wrote...Ch. 6 - Prob. 6.6BECh. 6 - Prob. 6.7BECh. 6 - Performance obligations; warranties LO55 Vroom...Ch. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - Variable consideration LO56 Leo Consulting enters...Ch. 6 - Prob. 6.16BECh. 6 - Prob. 6.17BECh. 6 - Prob. 6.18BECh. 6 - Prob. 6.19BECh. 6 - Prob. 6.20BECh. 6 - Prob. 6.21BECh. 6 - Estimating stand-alone selling prices: expected...Ch. 6 - Estimating stand-alone selling prices; residual...Ch. 6 - Prob. 6.24BECh. 6 - Prob. 6.25BECh. 6 - Contract assets and contract liabilities LO58...Ch. 6 - Long-term contract; revenue recognition over time;...Ch. 6 - Prob. 6.34BECh. 6 - Long-term contract; revenue recognition upon...Ch. 6 - Long-term contract; revenue recognition; loss on...Ch. 6 - Prob. 6.1ECh. 6 - Allocating transaction price LO54 Video Planet...Ch. 6 - Prob. 6.4ECh. 6 - Prob. 6.6ECh. 6 - Prob. 6.7ECh. 6 - Prob. 6.9ECh. 6 - Variable considerationmost likely amount; change...Ch. 6 - Variable considerationexpected value; change in...Ch. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Prob. 6.14ECh. 6 - Approaches for estimating stand-alone selling...Ch. 6 - FASB codification research LO56, LO57 Access the...Ch. 6 - FASB codification research LO58 Access the FASB...Ch. 6 - Long-term contract; revenue recognition over time;...Ch. 6 - Prob. 6.1PCh. 6 - Prob. 6.2PCh. 6 - Prob. 6.3PCh. 6 - Prob. 6.5PCh. 6 - Variable consideration; change of estimate LO53,...Ch. 6 - Prob. 6.7PCh. 6 - Prob. 6.8PCh. 6 - Prob. 6.10PCh. 6 - Long-term contract; revenue recognition over time...Ch. 6 - Prob. 6.1DMPCh. 6 - Judgment Case 52 Satisfaction of performance...Ch. 6 - Judgment Case 53 Satisfaction of performance...Ch. 6 - Prob. 6.5DMPCh. 6 - Prob. 6.7DMPCh. 6 - Prob. 6.9DMPCh. 6 - Prob. 6.10DMPCh. 6 - Prob. 6.12DMPCh. 6 - Prob. 6.13DMPCh. 6 - Prob. 6.14DMPCh. 6 - Prob. 6.15DMPCh. 6 - Prob. 1CCTC
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