Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Chapter 6, Problem 6.4MAD
Analyze and compare Monster Beverage and Brown-Forman
Monster Beverage Corporation (MNST) develops, markets, and sells energy and other alternative beverage brands. Brown-Forman Corporation (BF.B) manufactures and sells a wide variety of spirit and wine beverages, such as Jack Daniel’s â. The cost of goods sold and inventory were obtained from a recent annual report for both companies as follows (in millions):
| Monster Beverage | Brown-Forman | |
| Cost of goods sold | $1,090 | $ 945 |
| Inventories: | ||
| Beginning of year | 175 | 953 |
| End of year | 156 | 1,054 |
- a. Determine the inventory turnover for bath companies. Round all calculations to one decimal place.
- b. Determine the number of days’ sales in inventory for both companies. Use 365 days and round all calculations to one decimal place.
- c.
Interpret the difference in inventory efficiency based on the companies’ respective product types.
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The following income statement was drawn from the records of Joel Company, a merchandising firm:
JOEL COMPANY
Income Statement
For the Year Ended December 31, Year 1
Sales revenue (2,000 units × $125)
$250,000
Cost of goods sold (2,000 units × $65)
(130,000)
Gross margin
120,000
Sales commissions (10% of sales)
(25,000)
Administrative salaries expense
(30,000)
Advertising expense
(20,000)
Depreciation expense
(24,000)
Shipping and handling expenses (2,000 units × $1.00)
(2,000)
Net income
$19,000
Required
Reconstruct the income statement using the contribution margin format.
Calculate the magnitude of operating leverage.
Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent.
The following is Cullumber Company’s income statement for the past year.
Sales revenue
$336,000
Cost of goods sold
134,400
Gross margin
201,600
Operating expenses
145,600
Operating income
$56,000
If the company wants to sell a new product that costs $49 wholesale while keeping the same markup structure, what will be the price of the new product? (Use the gross margin percentage and round final answer to 2 decimal places, e.g. 25,124.25.)
Price of the new product
$enter the price of the new product in dollars rounded to 2 decimal places
Salespersons' Report and Analysis
Walthman Industries Inc. employs seven salespersons to sell and distribute its product throughout the state. Data taken from reports received from the salespersons during the year ended December 31 are as follows:
Salesperson
Total Sales
Variable Cost of Goods Sold
Variable Selling Expenses
Case
$392,000
$164,640
$82,320
Dix
544,000
174,080
92,480
Johnson
442,000
145,860
70,720
LaFave
589,000
294,500
88,350
Orcas
442,000
203,320
57,460
Sussman
465,000
162,750
83,700
Willbond
601,000
204,340
96,160
Required:
1. Prepare a table indicating contribution margin, variable cost of goods sold as a percent of sales, variable selling expenses as a percent of sales, and contribution margin ratio by salesperson. Round percents to the nearest whole number. Enter all amounts as positive numbers.
Waltham Industries Inc.
Salespersons' Analysis
For the Year Ended…
Chapter 6 Solutions
Corporate Financial Accounting
Ch. 6 - Prob. 1DQCh. 6 - Why is it important to periodically take a...Ch. 6 - Do the terms FIFO, LIFO, and weighted average...Ch. 6 - If inventory is being valued at cost and the price...Ch. 6 - Which of the three methods of inventory...Ch. 6 - If inventory is being valued at cost and the price...Ch. 6 - Using the following data, how should the inventory...Ch. 6 - The inventory at the end of the year was...Ch. 6 - Hutch Co. sold merchandise to Bibbins Company on...Ch. 6 - A manufacturer shipped merchandise to a retailer...
Ch. 6 - Cost flow methods The following three identical...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Perpetual inventory using weighted average...Ch. 6 - Periodic inventory using FIFO, LIFO, and weighted...Ch. 6 - Lower-of-cost-or-market method On the basis of the...Ch. 6 - Effect of inventory errors During the taking of...Ch. 6 - Effect of inventory errors During the taking of...Ch. 6 - Control of inventories Triple Creek Hardware Store...Ch. 6 - Control of inventories Hardcase Luggage Shop is a...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Perpetual inventory using FIFO Assume that the...Ch. 6 - FIFO and UFO costs under perpetual inventory...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Perpetual inventory using FIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Periodic inventory by three methods The units of...Ch. 6 - Periodic inventory by three methods; cost of goods...Ch. 6 - Comparing inventory methods Assume that a firm...Ch. 6 - Lower-of-cost-or-market inventory On the basis of...Ch. 6 - Inventory on the balance sheet Based on the data...Ch. 6 - Effect of errors n physical inventory Madison...Ch. 6 - Effect of errors in physical inventory Fonda...Ch. 6 - Error in inventory During 20Y5, the accountant...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Prob. 6.22EXCh. 6 - Retail method On the basis of the following data,...Ch. 6 - Prob. 6.24EXCh. 6 - Gross profit method Based on the following data,...Ch. 6 - Gross profit method Based on the following data,...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Dymac...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross profit method Selected data...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Pappas...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross profit method Selected data...Ch. 6 - Prob. 6.1MADCh. 6 - Analyze and compare Darden Restaurants to Panera...Ch. 6 - Analyze and compare Costco, Wal-Mart, and...Ch. 6 - Analyze and compare Monster Beverage and...Ch. 6 - Ethics in Action Sizemo Elektroniks sells...Ch. 6 - Ethics in Action Anstead Co. is experiencing a...Ch. 6 - Communication Golden Eagle Company began...
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