Question

In: Accounting

Robin Corp. provided the following GAAP incomestatement. The functional income statement for sales of 20,000...

Robin Corp. provided the following GAAP income statement. The functional income statement for sales of 20,000 pairs of sunglasses (sales px $50 each) is provided below:

Sales $1,000,000

COGS

Variable manufacturing $525,000

Fixed manufacturing 210,000 735,000

Gross profit 265,000

Sell & Adm.

Variable selling/administrative $50,000

Fixed selling/administrative 40,000 90,000

Op. inc. $ 175,000

Prepare a contribution margin income statement including percentages and unit costs for 21,000 units

Assume Robin sold 1,000 more units. By how much would operating income increase?

Assume Robin’s sales decreased $1,000, how much would operating income decrease

Expert Solution

Analysis of the functional income statement for sales of 20000 pairs of sunglasses -

fixed cost per unit = 250000/20000 = 12.5

Preparation of Contribution margin income statement including percentages and unit cost for 21000 units-

fixed cost per unit = 250000/21000

= 11.90

Calculation of the operating income increase Assume Robin's sold 1000 more unit -

fixed cost per unit = 250000/22000 = 11.36

operating income increase by = 217500-196250 = $ 21250

Calculation of the operating income decrease Assume Robin's sales decreased $ 1000 -

Robin's sales decreased by $1000 means sale reduced by 1000/50 = 20 units now unit sold = 21000-20 = 20980

operating income decrease by = 196250 - 195825 = $ 425

ekkarill92 answered 2 years ago

Summarize IFRS/GAAP differences from the following: Differences • Presentation of the income statement under GAAP follows...

Summarize IFRS/GAAP differences from the following: Differences • Presentation of the income statement under GAAP follows either a single-step or multiple-step format. IFRS does not mention a single-step or multiple-step approach. • Under IFRS, companies must classify expenses by either nature or function. GAAP does not have that requirement, but the SEC requires a functional presentation. • IFRS identifies certain minimum items that should be presented on the income statement. GAAP has no minimum information requirements. However, the SEC rules...

Schwert Corp. shows the following information on its 2019 income statement: sales = $242,000; costs =...

Schwert Corp. shows the following information on its 2019 income statement: sales = $242,000; costs = $153,000; other expenses = $7,900; depreciation expense = $17,700; interest expense = $14,100; taxes = $17,255; dividends = $11,000. In addition, you’re told that the firm issued $5,600 in new equity during 2019 and redeemed $4,100 in outstanding long-term debt. (Do not round intermediate calculations.) b. What is the 2019 cash flow to creditors? d. If net fixed assets increased by $22,000 during the...

Schwert Corp. shows the following information on its 2017 income statement: sales = $227,000; costs =...

Schwert Corp. shows the following information on its 2017 income statement: sales = $227,000; costs = $129,000; other expenses = $7,900; depreciation expense = $14,200; interest expense = $13,700; taxes = $21,770; dividends = $10,500. In addition, you’re told that the firm issued $5,200 in new equity during 2017 and redeemed $3,700 in outstanding long-term debt. A.) What was the 2017 operating cash flow? (Do not round intermediate calculations.) b.) What was the 2017 cash flow to creditors? (Do not...

Schwert Corp. shows the following information on its 2019 income statement: sales = $227,000; costs =...

Schwert Corp. shows the following information on its 2019 income statement: sales = $227,000; costs = $129,000; other expenses = $7,900; depreciation expense = $14,200; interest expense = $13,700; taxes = $21,770; dividends = $10,500. In addition, you’re told that the firm issued $5,200 in new equity during 2019 and redeemed $3,700 in outstanding long-term debt. (Do not round intermediate calculations.) a. What is the 2019 operating cash flow? b. What is the 2019 cash flow to creditors? c. What...

how is a contribution margin income statement different from a regular (GAAP) income statement?

11. Volbeat Corp. shows the following information on its 2015 income statement: sales = $242,000; costs...

11. Volbeat Corp. shows the following information on its 2015 income statement: sales = $242,000; costs = $153,000; other expenses = $7,900; depreciation expense = $17,700; interest expense = $14,100; taxes = $17,255; dividends = $11,000. In addition, you’re told that the firm issued $5,600 in new equity during 2015 and redeemed $4,100 in outstanding long-term debt. a. What is the 2015 operating cash flow? b. What is the 2015 cash flow to creditors? c. What is the 2015 cash...

11. Volbeat Corp. shows the following information on its 2015 income statement: sales = $267,000; costs...

11. Volbeat Corp. shows the following information on its 2015 income statement: sales = $267,000; costs = $148,000; other expenses = $8,200; depreciation expense = $17,600; interest expense = $12,400; taxes = $32,620; dividends = $15,500. In addition, you’re told that the firm issued $6,400 in new equity during 2015 and redeemed $4,900 in outstanding long-term debt.a.What is the 2015 operating cash flow?b. What is the 2015 cash flow to creditors?c.What is the 2015 cash flow to stockholders?d. If net...

Square Hammer Corp. shows the following information on its 2018 income statement: Sales = $215,000; Costs...

Square Hammer Corp. shows the following information on its 2018 income statement: Sales = $215,000; Costs = $104,000; Other expenses = $5,800; Depreciation expense = $9,000; Interest expense = $14,000; Taxes = $28,770; Dividends = $9,900. In addition, you're told that the firm issued $8,000 in new equity during 2018 and redeemed $9,600 in outstanding long-term debt. What is the 2018 cash flow to stockholders? If net fixed assets increased by $27,000 during the year, what was the addition to...

The following income statement and balance sheets for Laser World are provided: LASER WORLD Income Statement...

The following income statement and balance sheets for Laser World are provided: LASER WORLD Income Statement For the year-ended December 31, 2021 LASER WORLD Income Statement For the year-ended December 31, 2021 Sales revenue $ 2,280,000 Cost of goods sold 1,560,000 Gross profit 720,000 Expenses: Operating expenses 347,000 Depreciation expense 68,000 Loss on sale of land 4,900 Interest expense 21,000 Income tax expense 55,000 Total expenses 495,900 Net income $ 224,100 LASER WORLD Balance Sheet December 31 2021 2020 Assets...

An inexperienced accountant for Sarasota Corp. showed the following in the income statement: income before income...

An inexperienced accountant for Sarasota Corp. showed the following in the income statement: income before income taxes $359,000 and unrealized gain on available-for-sale securities (before taxes) $88,800. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 28% tax rate. Prepare a correct statement of comprehensive income.