Metlock Inc. sells appliances to Seasons Department Store. A recent order requires Metlock to manufacture and...

Metlock Inc. sells appliances to Seasons Department Store. A recent order requires Metlock to manufacture and deliver 500 toasters at a price of $88 per unit. Metlock’s manufacturing costs are approximately $44 per unit. The following schedule summarizes the production and delivery record of Hydra:

A) Assuming that Metlock recognizes revenue when the toasters are produced, how much revenue should be recognized in each of the three years?

B) Assuming that Metlock recognizes revenue at delivery, how much revenue should be recognized in each of the three years?

C) Calculate net income for the three periods under each of the two preceding assumptions. (Assumption A and B, for all 3 years)

Year	1	2	3	Total
Toasters produced	$ 200	$ 200	$ 100	$ 500
Costs incurred	$ 8,800	$ 8,800	$ 4,400	$ 22,000
Toasters delivered	$ 150	$ 200	$ 150	$ 500
Cash received	$ 8,800	$ 13,200	$ 17,600	$ 39,600

Solutions

Expert Solution

Particulars	year 1	year 2	year 3
Toasters produced	200	200	100
Selling Price	88	88	88
Revenue under A	$17,600.00	$17,600.00	$8,800.00
Cost	$8,800.00	$8,800.00	$4,400.00
Net Income	$8,800.00	$8,800.00	$4,400

Particulars	year 1	year 2	year 3
Toasters produced	200	200	100
Selling Price	88	88	88
Toasters Delivered	150	200	150
Revenue under B	$13,200.00	$17,600.00	$13,200.00
Closing Stock	50	50	0
Opening Stock	0	50	50
Closing Stock value ($44)	2200	2200	0
Opening Stock value (44)	0	2200	2200
Gross profit	$15,400.00	$17,600.00	$11,000.00
Cost	$8,800.00	$8,800.00	$4,400.00
Net Income	$6,600.00	$8,800.00	$6,600.00

Year 1 Year 2 Year 3

Revenue under A

$17,600.00

$8,800.00

B) Year 1 Year 2 Year 3

Revenue under B

$13,200.00

$17,600.00

$13,200.00

c) (A) Year 1 Year 2 Year 3

Net Income

$8,800.00

$4,400

(B) Year 1 Year 2 Year 3

Net Income

$6,600.00

$8,800.00

$6,600.00

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Superior Appliances is a retail store that sells household appliances. Merchandise sales are subject to an...

Superior Appliances is a retail store that sells household appliances. Merchandise sales are subject to an 8 percent sales tax. The firm’s credit sales for July are listed below, along with the general ledger accounts used to record these sales. The balance shown for Accounts Receivable is for the beginning of the month. DATE TRANSACTIONS July 1 Sold a dishwasher to John Martinez; issued Sales Slip 501 for $925 plus sales tax of $74. 6 Sold a washer to Helen...

Chapelle Appliances sells dishwashers for $ 1,200 each, which includes a 2-year warranty that requires the...

Chapelle Appliances sells dishwashers for $ 1,200 each, which includes a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2020, Chapelle sold 600 dishwashers on account. Based on experience, the company has estimated the total 2-year warranty costs at $ 40 for parts and $ 75 for labour. (Assume sales all occur at December 31, 2020.) In 2021, Chapelle Company incurred actual warranty costs relative to 2020 dishwasher sales of $ 4,000...

1. Silver Corporation, which operates a department store, sells a television to a store employee for...

1. Silver Corporation, which operates a department store, sells a television to a store employee for $300. The regular customer price is $500, and the gross profit rate is 25%. The corporation also sells the employee a service contract for $120. The regular customer price for the contract is $150. How much must the employee include in income from both these transactions in total? a. $125 b. $30 c. $75 d. $0 2. Ellie (a single taxpayer) is the owner...

The soft goods department of a large department store sells 175 units per month of a...

The soft goods department of a large department store sells 175 units per month of a certain large bath towel. The unit cost of a towel to the store is $2.50 and the cost of placing an order has been estimated to be $12.00. The store uses an inventory carrying charge of 27% per year. Determine the optimal order quantity, order frequency, and the annual cost of inventory management. If, through automation of the purchasing process, the ordering cost can...

The Fashion Store sells fashion items. The store has to order these items many months in...

The Fashion Store sells fashion items. The store has to order these items many months in advance of the fashion season in order to get a good price on the items. Each unit costs Fashion $100. These units are sold to customers at a price of $250 per unit. Items not sold during the season can be sold to the outlet store at $80 per unit. If the store runs out of an item during the season it has to...

A department store sells 10,000 units of handbags per year. The store orders handbags from a...

A department store sells 10,000 units of handbags per year. The store orders handbags from a manufacturer. Each time an order is placed, an ordering cost of $40 is incurred. The store pays $30 for each hand bag. The holding cost of $1 of inventory is 25 cents per year. (i.e. inventory holding rate is 25%). What is the economic order quantity?

. A quality survey asked recent customers of their experience at a local department store. One...

. A quality survey asked recent customers of their experience at a local department store. One question asked for the customers rating on their service using categorical responses of average, outstanding, and exceptional. Another question asked for the applicant’s education level with categorical responses of Some HS, HS Grad, Some College, and College Grad. The sample data below are for 700 customers who recently visited the department store. Education Quality Rating Some HS HS Grad Some College College Grad Average...

Metlock, Inc. sells products that carry a two year warranty. Any defective product is replaced with...

Metlock, Inc. sells products that carry a two year warranty. Any defective product is replaced with a new item taken from inventory. Management believes that this is the most cost effective way to deal with any defects or customer complaints. Estimates of claims are expected to be 2 out of every 100 units sold. The units sell for $32 and cost $22. All sales are on account, and the 13% HST is not included in the selling price. Also, in...

8. A quality survey asked recent customers of their experience at a local department store. One...

8. A quality survey asked recent customers of their experience at a local department store. One question asked for the customers rating on their service using categorical responses of average, outstanding, and exceptional. Another question asked for the applicant’s education level with categorical responses of Some HS, HS Grad, Some College, and College Grad. The sample data below are for 700 customers who recently visited the department store. Education Quality Rating Some HS HS Grad Some College College Grad Average...

A quality survey asked recent customers of their experience at a local department store. One question...

A quality survey asked recent customers of their experience at a local department store. One question asked for the customers rating on their service using categorical responses of average, outstanding, and exceptional. Another question asked for the applicant’s education level with categorical responses of Some HS, HS Grad, Some College, and College Grad. The sample data below are for 700 customers who recently visited the department store. Education Quality Rating Some HS HS Grad Some College College Grad Average 55...

Subjects