Schrute Company has 7,200 units of its sole product in inventory that it produced last year at a cost of $30 each. This year's model is superior to last year's, and the 7,200 units cannot be sold at last year's regular selling price of $40 each. Schrute has two alternatives for these items: (1) they can be sold to a wholesaler for $10 each or (2) they can be processed further at a cost of $130,100 and then sold for $27 each. Should Schrute sell the products as is or process further and then sell them? INCREMENTAL REVENUE AND COST OF ADDITIONAL PROCESSING Revenue if processed further Revenue if sold as is Incremental revenue Incremental net income(Loss) The company should:
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- Varto Company has 7,800 units of its product in inventory that it produced last year at a cost of $159,000. This year's model is better than last year's, and the 7,800 units cannot be sold at last year's normal selling price of $49 each. Varto has two alternatives for these units: (1) They can be sold as is to a wholesaler for $109,200 or (2) they can be processed further at an additional cost of $131,200 and then sold for $234,000. (a) Prepare a sell as is or process further analysis of income effects. (b) Should Varto sell the products as is or process further and then sell them? (a) Sell or Process Analysis Revenue Costs Income Incremental income (loss) to sell as is (b) The company should: Sell As Is Process FurtherVarto Company has 10,400 units of its sole product in inventory that it produced last year at a cost of $35 each. This year's model is superior to last year's, and the 10,400 units cannot be sold at last year's regular selling price of $44 each. Varto has two alternatives for these items: (1) they can be sold to a wholesaler for $10 each or (2) they can be processed further at a cost of $245,800 and then sold for $33 each. Should Varto sell the products as is or process further and then sell them? INCREMENTAL REVENUE AND COST OF ADDITIONAL PROCESSING Revenue if processed further Revenue if sold as is Incremental revenue Incremental net income(Loss) The company should.Varto Company has 7,200 units of its product in inventory that it produced last year at a cost of $154,000. This year’s model is better than last year’s, and the 7,200 units cannot be sold at last year’s normal selling price of $44 each. Varto has two alternatives for these units: (1) They can be sold as is to a wholesaler for $79,200 or (2) they can be processed further at an additional cost of $150,400 and then sold for $223,200.(a) Prepare a sell as is or process further analysis of income effects.(b) Should Varto sell the products as is or process further and then sell them?
- Varto Company has 12,400 units of its sole product in inventory that it produced last year at a cost of $23 each. This year’s model is superior to last year’s, and the 12,400 units cannot be sold at last year’s regular selling price of $51 each. Varto has two alternatives for these items: (1) they can be sold to a wholesaler for $13 each, or (2) they can be reworked at a cost of $254,100 and then sold for $33 each. Prepare an analysis to determine whether Varto should sell the products as is or rework them and then sell them. INCREMENTAL REVENUE AND COST OF ADDITIONAL PROCESSING Revenue if processed further Revenue if sold as isIncremental revenue Add: Incremental cost of processingIncremental net income(Loss) The company should:XYZ, Inc. sold 100 widgets to ABC, Inc. on 1/1/18 for $50 per widget on account. The sales agreement allows ABC to return widgets that they are unsatisfied with or exceed their needs within 30 days of the sale. The widgets cost XYZ $30 to produce. XYZ doesn’t anticipate any material cost of restocking the inventory nor any inability to resell them at $50 per unit. ABC expects that 10 widgets will be returned within the return period. Discuss the criteria for recognizing sales returns and allowances covered in the text and determine whether this arrangement meets the requirements Record the journal entry for the sale on 1/1/18. ABC returned 5 widgets on 1/18/18. Record the journal entry for this event. XYZ prepared a balance sheet on 1/31/18. Record any journal entries that they would need make prior to preparing their financial statements. Show how their accounts receivable and related accounts would be reported on that balance sheet. Show how the sales and gross profit section of…Racine Co. determined its desiccated coconut inventory on a FIFO basis at P520,000 with a replacement cost of P400,000 based on physical inventory taken on December 31, 2021. After further processing costs of P240,000, Racine estimated that the desiccated coconut inventory could be sold as finished desiccated coconut candies for P800,000. Normal profit margin for Racine is 10% of sales. What amount should Racine report as desiccated coconut inventory in its December 31, 2021 balance sheet under the lower of cost or market value? a. P480,000 b. P520,000 c. P560,000 d. P400,000
- Varto Company has 7,000 units of its product in inventory that it produced last year at a cost of $154,000 This year's model is better than last year's, and the 7,000 units cannot be sold at last year's normal selling price of 535 each. Varto has two alternatives for these units: (1) They can be sold as is to a wholesaler for $5 6,000 or (2) they can be processed further at an additional cost of $125,000 and then sold for $175,000. (a) Prepare a sell as is or process further analysis of income effects. (b) Should Varto sell the products as is or process further and then sell them? \table[(a) Sell or Process Analysis, Sell As is, Process Further). (Revenue..]. [Costs, Income..].[..],[Incremental income (loss) to sell as is..].[..], [(b) The company should...]]One of the products that Justine Corporation sells is “Extra Soft” floor mats. Justine’s ordering costs related to the mat is P12.50 per order. The cost of carrying one mat for one year is P16.00. Justine sells 40, 000 of these mats evenly throughout the year. 1. If, instead of following the EOQ, the company decided to place an order of 200 units per order, how much will be the total inventory cost?Allegiance, Inc. has $125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods could be sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative?
- Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 87,600 units per year is: Direct materials Direct labor $ 2.00 $ 3.00 $ 0.70 Variable manufacturing overhead Fixed manufacturing overhead $ 3.85 Variable selling and administrative expense $ 1.20 Fixed selling and administrative expense $ 2.00 The normal selling price is $21.00 per unit. The company's capacity is 102,000 units per year. An order has been received from a mail-order house for 1,200 units at a special price of $18.00 per unit. This order would not affect regular sales or the company's total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels…IT Company has 15,000 units in inventory that had a production cost of P3 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of P23,000 and sold for P28,000. Another alternative is to sell the units to a junk dealer for P8,500. The relevant cost for IT Company to consider in making its decision is A.P45,000 of original product costs B.P23,000 for reworking the units C.P68,000 for reworking the units D.P28,000 for selling the units to the junk dealerAuge Company annually purchases 1,000 tons of raw material at a cost of $100,000 with terms of 2/10, n/30. Auge uses the net price method to account for purchase discounts. Freight costs amount to $10,000 and storage and handling costs to $7,500. The inventory value of $115,500 will change if the discount were not taken?