Sales.... Cost of goods sold Fixed Budget Report For Year Ended December 31, 2019 Direct materials .... Direct labor..... Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line).. Utilities ($45,000 is variable) .... Plant management salaries Gross profit...... Selling expenses Packaging..... Shipping ... Sales salary (fixed annual amount).. General and administrative expenses Advertising expense Salaries...... Entertainment expense Income from operations $975,000 225,000 60,000 300,000 195,000 200,000 75,000 105,000 250,000 125,000 241,000 90,000 $3,000,000 1,955,000 1,045,000 430,000 456,000 $ 159,000

Sales.... Cost of goods sold Fixed Budget Report For Year Ended December 31, 2019 Direct materials .... Direct labor..... Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line).. Utilities ($45,000 is variable) .... Plant management salaries Gross profit...... Selling expenses Packaging..... Shipping ... Sales salary (fixed annual amount).. General and administrative expenses Advertising expense Salaries...... Entertainment expense Income from operations $975,000 225,000 60,000 300,000 195,000 200,000 75,000 105,000 250,000 125,000 241,000 90,000 $3,000,000 1,955,000 1,045,000 430,000 456,000 $ 159,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Prepare a contribution margin format income statement; calculate breakeven point Presented here is the income statement for Fairchild Co. for March:Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,000Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38,000Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,000Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000Based on an analysis of cost behavior patterns, it has been determined that the company’s contribution margin ratio is 30%.Required:a. Rearrange the preceding income statement to the contribution margin format.b. Calculate…
Hudson Co. reports the contribution margin income statement for 2019 below. Contribution Margin Income StatementFor Year Ended December 31, 2019Sales (9,600 units at $225 each) . . . . . . . . . . . . . . . . . . . . $2,160,000Variable costs (9,600 units at $180 each) . . . . . . . . . . . . . 1,728,000Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,000Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,000Pretax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 108,000 Assume the company is considering investing in a new machinethat will increase its fixed costs by $40,500 per year and decrease its variable costs by $9 per unit.Prepare a forecasted contribution margin income statement for 2020 assuming the company purchases thismachine.
Hudson Co. reports the contribution margin income statement for 2019 below. Contribution Margin Income StatementFor Year Ended December 31, 2019Sales (9,600 units at $225 each) . . . . . . . . . . . . . . . . . . . . $2,160,000Variable costs (9,600 units at $180 each) . . . . . . . . . . . . . 1,728,000Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,000Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,000Pretax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 108,000 The marketing manager believes that increasing advertising costs by $81,000 in 2020 will increase the company’s sales volume to 11,000 units. Prepare a forecasted contribution margin income statement for 2020 assuming the company incurs the additional advertising costs.
Hudson Co. reports the contribution margin income statement for 2019 below. Contribution Margin Income StatementFor Year Ended December 31, 2019Sales (9,600 units at $225 each) . . . . . . . . . . . . . . . . . . . . $2,160,000Variable costs (9,600 units at $180 each) . . . . . . . . . . . . . 1,728,000Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,000Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,000Pretax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 108,000 1. Assume Hudson Co. has a target pretax income of $162,000 for 2020. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target pretax income for 2020, what is its margin of safety (in percent)? (Round to one decimal place.)
Hudson Co. reports the contribution margin income statement for 2019 below. Contribution Margin Income StatementFor Year Ended December 31, 2019Sales (9,600 units at $225 each) . . . . . . . . . . . . . . . . . . . . $2,160,000Variable costs (9,600 units at $180 each) . . . . . . . . . . . . . 1,728,000Contribution margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,000Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,000Pretax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 108,000 If the company raises its selling price to $240 per unit, computeits (1) contribution margin per unit, (2) contribution margin ratio, (3) break-even point in units, and(4) break-even point in sales dollars.
Mason Corporation began operations at the beginning of the current year. One of the company’s products, a refrigeration element, sells for $185 per unit. Information related to the current year’s activities follows. Net income: $168,000 Variable costs per unit:Direct material............................................................................................$ 20Direct labor......................................................................................................37Manufacturing overhead.......................................................................... 48Annual fixed costs:Manufacturing overhead............................................................................................................$600,000Selling and administrative........................................................................... 860,000Production and Sales activity:Production…
Cleary Company manufactures and sells a single product. The company's sales and expenses for last year follow: Total Per Unit % Sales. . . . . . . . . . . . . . . . . . . $100,000 $20 ? Variable expenses. . . . . . . ? ? ? Contribution margin. . . . . . ? ? ? Fixed expenses. . . . . . . . . . 12,000 Operating income. . . . . . . . $28,000 1. Fill in the missing numbers in the table. Use the following questions to help fill in the missing numbers in the table: a. What is the total contribution margin? b. What is the total variable expense? c. How many units were sold? d. What is the per-unit variable expense? e. What is the per-unit contribution margin? 2. Answer the following questions about breakeven analysis: a. What is the breakeven point in units? b. What is the breakeven point in sales dollars? 3. Answer the following questions about target profit analysis and…
Customers balance December 31, 2023 om customers e balance, March 31, 2024: cted in 2nd Ot 2024 Data table Total sales Budgeted purchases of direct matenal Budgeted direct labor cost Budgeted manufacturing overhead costs Variable manufacturing overhead Depreciation Insurance and property taxes Budgeted selling and administrative expenses Salaries expense Rent expense Insurance experese Depreciation experie Supples expense Print Done 208.000 40,900 37,500 1,100 1.200 6,700 4,000 1,000 1,400 6.240
Cost of goods manufactured, cost of goods sold, and income statementGrandSlam, Inc., incurred the following costs during March:Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,340Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,752Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,135Manufacturing overhead, actual. . . . . . . . . . . . . . . . . . . . . . . . 32,760Raw materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,464Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,675 Required:During the month, 2,600 units of product were manufactured and 1,450 units of product were sold. On March 1, GrandSlam, Inc., carried no inventories. On March 31, there were no inventories for raw materials or work in process.a. Calculate the cost of goods manufactured during March and the average cost per unit of…
Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows: Amount Percent of SalesSales .................................................... $ 80,000 100%Variable expenses ............................. 32,000 40%Contribution margin ....................... 48,000 60%Fixed expenses .................................. 38,000Net operating income ................. $ 10,000 Required:1. What is the company’s degree of operating leverage?2. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in sales.3. Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 5% increase in sales.
Data Year 2 Quarter Year 3 Quarter 1 2 3 4 1 2 Budgeted unit sales 40,000 60,000 100,000 50,000 70,000 80,000 • Selling price per unit • Accounts receivable, beginning balance • Sales collected in the quarter sales are made • Sales collected in the quarter after sales are made • Desired ending finished goods inventory is • Finished goods inventory, beginning • Raw materials required to produce one unit • Desired ending inventory of raw materials is • Raw materials inventory, beginning • Raw material costs • Raw materials purchases are paid and • Accounts payable for raw materials, beginning balance $12 per unit $65,000 75% 25% 30% of the budgeted unit sales of the next quarter 12,000 units 5 pounds 10% of the next quarter's production needs 23,000 pounds $0.80 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase $81,500 •Direct labor cost per hour •Direct labor hour per unit $15 per hour 0.2 hour per unit $2 per hour $60,000 •Variable MOH rate…
Prepare a contribution margin format income statement; answer what-ifquestions Shown here is an income statement in the traditional format for a firm with a sales volume of 20,000 units. Cost formulas also are shown:Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000Cost of goods sold ($36,000 1 $5.20/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,000Operating expenses:Selling ($9,200 1 $0.30/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,200Administration ($18,800 1 $0.50/unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,800Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,000Required:a. Prepare an income statement in the…