The question is incomplete. Here is the complete question.
Arden Company reported the following costs and expenses for the most recent month: Direct materials $ 79,000 Direct labor $ 41,000 Manufacturing overhead $ 19,000 Selling expenses $ 22,000 Administrative expenses $ 34,000 Required:
1) What is the total amount of product costs?
2) What is the total amount of period costs?
3) What is the total amount of conversion costs?
4) What is the total amount of prime costs?
Answer:
(1) product cost = $139,000
(2) period cost = $56,000
(3) conversion cost = $60,000
(4) prime cost = $120,000
Explanation:
(1) The total product costs can be calculated as follows.
= Direct material + direct labor + manufacturing overhead
= $79,000 + $41,000 + $19,000
= $139,000
(2) The period cost can be calculated as follows
= selling expenses + administrative expenses
= $22,000 + $34,000
= $56,000
(3) The conversion cost can be calculated as follows
= direct labor + manufacturing overhead
= $41,000 + $19,000
= $60,000
(D) The prime cost can be calculated as follows
= Direct material + direct labor
= $79,000 + $41,000
= $120,000
Answer:
Given that,
Beginning capital of Coburn = $55,000
Beginning capital of Webb = $95,000
Partnership earned net income = $71,000
Coburn made drawings = $17,000
Webb made drawings = $25,000
Income-sharing ratio = 30:70
Coburn's share in profits = Net income earned × 30%
= $71,000 × 0.3
= $21,300
Webb's share in profits = Net income earned × 30%
= $71,000 × 0.7
= $49,700
Therefore, the journal entry is as follows:
Profit and loss A/c Dr. $71,000
To Coburn's capital A/c $21,300
To Webb's capital A/c $49,700
(To record the allocation of net income)
Answer:
The expected January 31 Accounts Payable balance is $6,590
Explanation:
The December Accounts Payable balance is $7,900 - this is the 50% purchase amount in December and will be paid in January.
In January, Fortune Company will pay 50% purchase amount in December and 50% purchase amount in January.
Expected payment = $7,900 + 50% x $13,180 = $14,490
At January 31, the expected Accounts Payable balance:
$13,180 x 50% = $6,590
The expected Accounts Payable balance for Fortune Company at the end of January is $10,540, taking into account the payables carried over from December and half of January's purchases.
The question is regarding the calculation of the expected Accounts Payable balance at the end of January for Fortune Company. The company's payment schedule shows a split of 50% payment in the month of purchase and 50% in the following month. To compute the January 31 Accounts Payable, we need to consider the December Accounts Payable which is to be paid in January (50% of $7,900 = $3,950), and half of January's purchase ($13,180) which will amount to $6,590. Hence the expected January 31 Accounts Payable is: $3,950 (December's payable) + $6,590 (January's payable) = $10,540.
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Answer:
Following are the solution to this question:
Explanation:
Yes, at the end of the year Lauren is now under the age of eighteen but her salary is much more than $2,100, and she's eligible to its Kiddie levy. Notice that perhaps the child's net unpaid wages are a kiddie tax base. Net income that is undeserved shall be less than total salary of even an unarned infant minus $2,100 or tax payable of the child. Here, Lauren's Tax Income is measured as gross income of $9,200, minus her $3,350 = $5,850. That gross taxes unattained minus 2,100 dollars was estimated as 6.200 dollars less 2,100 dollars = 4,100 dollars taxed to use a fide and interest deduction schedule. The other $1,750 is paid 10 percent of Lauren's cost.
Common stock 110,000 Warranties payable (short term) 6,500
Notes receivable (short term) 32,500 Gain on sale of equipment 19,000
Allowance for doubtful accounts 19,000 Operating expenses 65,000
Accumulated depreciation 66,000 Cash flow from investing activities 116,000
Notes payable (long term) 160,000 Prepaid rent 38,000
Salvage value of building 21,000 Land 95,000
Interest payable (short term) 6,000 Cash 41,000
Uncollectible accounts expense 45,000 Inventory 101,000
Supplies 6,500 Accounts payable 55,000 Equipment 243,000
Interest expense 36,000 Interest revenue 6,200
Salaries payable 68,000 Sales revenue 940,000
Unearned revenue 47,000 Dividends 20,000
Cost of goods sold 595,000 Warranty expense 9,200
Accounts receivable 108,000 Interest receivable (short term) 3,600
Depreciation expense 3,000
Answer:
Eller Equipment Co.
Income statement
Particular Amount($) Amount ($)
Sales revenue 940,000
Less: Cost of good sold (595,000)
Gross margin 345,000
Operating expenses
Salaries expenses 122,000
Operating expenses 65,000
Warranty expenses 9,200
Un-collectible account expenses 45,000
Depreciation expenses 3,000
Total operating expenses (244,200)
Operating income 100,800
Non-operating expenses
Interest revenue 6,200
Interest expenses (36,000)
Gain on sale of equipment 19,000
Total non-operating items (10,800)
Net Income $90,000
Balance Sheet
Assets Amount$
Current Assets
Cash 41,000
Accounts receivable 108,000
Less: Allowance for doubtful (19,000) 89,000
accounts
Merchandise inventory 101,000
Interest receivable 3600
Prepaid rent 38,000
Supplies 6,500
Notes receivable 32,500
Total current assets 311,600
Property Plant and Equipment
Equipment 243,000
Less: Accumulated depreciation (66,000) 177,000
Land 95,000
Total property plant and equipment 272,000
Total Assets 583,600
Liabilities and Stockholder Equity
Current liabilities
Account payable 55,000
Unearned revenue 47,000
Warranties payable 6,500
Interest payable 6,000
Salaries payable 68,000
Total current liabilities 182,500
Long-term liabilities
Notes payable 160,000
Total long-term liabilities 160,000
Stockholders equity
Common stock 110,000
Retained earning 131,100
Total stockholders equity 241,100
Total liabilities and stockholders equity $583,600
Workings
Retained earning = Beginning retained earning + Net income - Dividend
= 61,100 + 90,000 - 20,000
= 131,100
The multistep income statement and the classified balance sheet was prepared for the Eller Equipment Co. using the provided year 1 figures. The net income was found to be $98,200 and total assets for the company were calculated to be $541,000. These statements are essential tools for financial decision making in business.
Multistep Income Statement for Eller Equipment Co.
Start by listing the different income categories. The sales revenue is $940,000.
Deduct the cost of goods sold which is $595,000 to calculate the gross profit: $345,000.
Next, deduct the operating expenses that include salaries expense ($122,000), uncollectible accounts expense ($45,000), operating expenses ($65,000), depreciation expense ($3,000), and interest expense ($36,000) to arrive at an operating income: $73,000.
Lastly, consider the gain on sale of equipment ($19,000) and the interest revenue ($6,200) to find a net income of $98,200.
Classified Balance Sheet for Eller Equipment Co.
Start with assets that include cash ($41,000), accounts receivable ($108,000 - $19,000 = $89,000), inventory ($101,000), Prepaid Rent ($38,000), Land ($95,000), and Equipment ($243,000 - $66,000 = $177,000) to get a total asset of $541,000.
Next, consider liabilities which include accounts payable ($55,000), salaries payable ($68,000), interest payable ($6,000), unearned revenue ($47,000), warranties payable ($6,500), and notes payable ($160,000) to get a total liability of $342,500.
Finally, calculate the equity. The retained earnings are beginning retained earnings ($61,100) + net income ($98,200) - dividends ($20,000) = $139,300.
Adding the common stock ($110,000) will give a total equity of $249,300.
Check your work: Assets ($541,000) = Liabilities ($342,500) + Equity ($249,300)
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Answer:
Rock Inc.
Gross profit ratio:
= 0.70
Explanation:
a) Data and Calculations:
Sales $473,864
Cost of Goods Sold 142,263
Gross profit $331,601
Gross profit ratio = Gross profit/Sales
= $331,601/$473,864
= 0.69978
= 0.70
b) Rock's gross profit is the difference between the Sales Revenue and the Cost of Goods Sold. It is the first profit point on the Income Statement. It measures the company's ability to convert sales revenue into profit after accounting for the cost of goods sold. This profit will cover the expenses incurred in running the business for the particular period.
Variable expenses 750,000
Contribution margin 500,000
Fixed expenses 320,000
Net operating income $ 180,000
Required:
1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level.
2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls?
3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $202,000, as last year?
4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs?
5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls?
6. Refer to the data in (5) above.
a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $202,000, as last year?
b. Assume the new plant is built and that next year the company manufactures and sells 37,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.
Answer:
Please find attached solutions
Explanation:
a. Last year contribution margin ratio
= Contribution margin / Sales
= $500,000 / $1,250,000
= 40%
ai Break even point in balls
But Contribution margin per unit
= $25 - $15
= $10 per unit.
Therefore ,
Break even point in balls
= Fixed cost / Contribution margin per unit
= $320,000 / $10
= 32,000 balls.
b. The degree of operating leverage at last year' s sales level
= Contribution margin / Net operating income
= $500,000 / $180,000
= 2.78
Please other solutions are as attached.
The manufacturing company must calculate and consider several factors when deciding on changes to labor costs and manufacturing processes, including the Contribution Margin (CM) ratio, break-even point, degrees of operating leverage, and the potential impact of a new automated plant.
The Northwood Company, which manufactures basketballs, has to make several business decisions based on manufacturing costs, sales, and net operating income. Many essential factors have to be calculated, such as the Contribution Margin (CM) ratio, the break-even point, the degree of operating leverage, and potential changes due to increased labor rates and a different manufacturing plant.
1. (a) Last year's CM ratio was 40% (500,000 / 1,250,000). The break-even point in balls is 32,000 balls (320,000 / 25 ×0.40). (b) The degree of operating leverage at last year’s sales level is 2.78 (500,000 / 180,000).
2. If variable expenses increase by $3.00 per ball, next year's CM ratio will be 28% ((25-18) / 25). The break-even point in balls is 45,714 balls (320,000 / (25×0.28)).
3. If the expected change in variable expenses takes place, 56,667 balls will have to be sold next year to earn the same net operating income, $202,000 ((320,000 + 202,000) / (25×0.28)).
4. To maintain the same CM ratio, the selling price per ball must be $30.00 next year ((15+3)/0.4).
5. If a new automated manufacturing plant is built, the new CM ratio would be 64% ((15×0.6) / 25) and the new break-even point in balls is 50,000 balls ((320,000×2) / (25×0.64)).
6. (a) If the new plant is built, 56,333 balls will have to be sold next year to earn the same net operating income, $202,000 ((320,000×2 + 202,000) / (25×0.64)). (b) If 37,000 balls are sold, the company's contribution format income statement would show sales of $925,000, variable expenses of $333,000, fixed expenses of $640,000, and a net operating loss of $48,000. The degree of operating leverage is negative in this case because of the loss.
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