Question
In: Accounting
A- ABC company has two divisions--Women and Men. The divisions have the following revenues and expenses:...
A- ABC company has two divisions--Women and Men. The divisions have the following revenues and expenses:
|
Women |
Men |
|||||
|
Sales |
$ |
500,000 |
$ |
550,000 |
||
|
Variable costs |
200,000 |
275,000 |
||||
|
Traceable fixed costs |
150,000 |
180,000 |
||||
|
Allocated common corporate costs |
135,000 |
170,000 |
||||
|
Net income (loss) |
$ |
15,000 |
$ |
(75,000) |
||
The management of ABC is considering the elimination of the Men Division. If the Men Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision.
Required:
Should the Company drop Men division? Explain. Support you answer with the necessary calculations. (7.5 marks)
B- XYZ Company manufactures and sell wooden product. It wants to prepare cash budget for the second quarter of the year. The company’s sales budget for the second quarter given below:
|
April |
May |
June |
Total |
|
|
Budgeted Credit Sales |
$470,000 |
$670,000 |
$230,000 |
$1,370,000 |
- Credit sales are collected as follows:
25% in the same month of sale, 65% in the month following sale, and 10% in the second month following sale
- February sales totaled $400,000, and March sales totaled $430,000.
Required:
1. Prepare the cash collection schedule for the second quarter.
2. What is the accounts receivable balance on June 30th?
C- ABC Corporation has estimated the following information for first quarter of 2020 for one of its products:
|
January |
February |
March |
||
|
Units to be produced |
128,000 |
140,000 |
152,000 |
|
|
Desired ending inventory of finished goods |
30,000 |
36,000 |
38,000 |
|
The ending inventory at December 2019 was 28,000 units.
Required:
Prepare the Production Budget and the Sales Budget for the first quarter of 2020, assuming selling price per unit is $20.
D- The following information has been take from a manufacturing company for the year 2019:
Sales revenues 36,000 – opening inventory of materials 10,000 – closing inventory of materials 8,000 – opening inventory of finished goods 6,000 – closing inventory of finished goods 4,000 – cost of goods produced 26,000
Required: Calculate cost of goods sold and gross profit for the year ended December 31, 2019.
Solutions
Expert Solution
Please find below
| Men Division | |||||||
| 1 | Sales | 550,000.00 | |||||
| Less: Variable costs | 275,000.00 | ||||||
| Margin | 275,000.00 | ||||||
| Less: traceable fixed costs | 180,000.00 | ||||||
| Net margin towards corporate costs | 95,000.00 | ||||||
| Since, Men division is contributing net positive margin towards corporate costs, division should be continued | |||||||
| 2 | Working of total sales- | ||||||
| Feb | March | April | May | June | |||
| Credit sales | 320,000 | 344,000 | 470,000 | 670,000 | 230,000 | ||
| Credit sales -% | 80 | 80 | 80 | 80 | 80 | ||
| Total sales | 400,000 | 430,000 | 587,500 | 837,500 | 287,500 | ||
| Cash Budget is as follows: | |||||||
| April | May | June | |||||
| Cash receipt- | |||||||
| Cash sales -20% | 117,500.00 | 167,500.00 | 57,500.00 | ||||
| Credit collection | |||||||
| -1 month due | 279,500.00 | 381,875.00 | 544,375.00 | ||||
| -2 month due | 40,000.00 | 43,000.00 | 58,750.00 | ||||
| Total cash receipt | 437,000.00 | 592,375.00 | 660,625.00 | ||||
| Debtors Balance as on 30 June- | |||||||
| 75% of June Sales | 215,625 | ||||||
| 10% of May sales | 83,750 | ||||||
| Total | 299,375 | ||||||
| 3 | Production Budget- | January | February | ||||
| Opening inventory | 28,000 | 30,000 | |||||
| Production during the quarter | 128,000 | 140,000 | |||||
| Desired inventory | 30,000 | 36,000 | |||||
| Forecasted sales | 126,000 | 134,000 | |||||
| Sales Budget | January | February | |||||
| Opening inventory | 28,000 | 30,000 | |||||
| Production during the quarter | 128,000 | 140,000 | |||||
| closing inventory | 30,000 | 36,000 | |||||
| Sales (Production + opening- closing) | 126,000 | 134,000 | |||||
| Sales price | 20 | 20 | |||||
| Sales Value | 2,520,000 | 2,680,000 | |||||
 ekkarill92 answered 2 years agoRelated SolutionsQuestion 3 A- ABC company has two divisions--Women and Men. The divisions have the following revenues...Question 3
A- ABC company has two
divisions--Women and Men. The divisions have the following revenues
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Men
Sales
$
500,000
$
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Variable costs
200,000
275,000
Traceable fixed costs
150,000
180,000
Allocated common corporate costs
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170,000
Net income (loss)
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