Question

In: Accounting

Cruz Inc. manufactures a popular premium toy. During its first year, the company incurred these costs:...

Cruz Inc. manufactures a popular premium toy. During its first year, the company incurred these costs:

$427000 Cost to manufacture 7000 toys
$110000 Research and development costs
$35000 Cost to ship completed products to retailers

Cruz sells 80% of its products for $183 each.

1. What will Cruz report as sales revenue for Year1?  

2. What will Cruz report as the cost of goods sold for Year1?  

3. What will Cruz report as net income for Year1?  

4. What will Cruz report as inventory on the balance sheet as of the end of Year1?  

Solutions

Expert Solution

1. Sales Revenue: sales price is $183 each and product quantity is 80% of Total 7000 toys which is produced during the year so quantity is 5600 toys.

so sales revenue is 5600*183= $1024800

2. cost of goods sold: for this first of all we have to calculate each cost for 80% (5600 Toys) products sold

Manufacture Cost For 7000 Toys is $427000 so per unit cost is 427000/7000= 61 so cost of manufactur of 5600 toys is 61*5600= $341600

Research and Development cost remains to be equal because this cost have no effect of No. of products to be sold. it occures for all products so Research and development cost is $110000

Shipping Cost Also remain same because here information is not given that how much product is completed so we assume all products are completed and shipped. and this is a whole some amount. not depended on quantity of product. so cost is $35000

Note if any information was given about shipping cost per piece or others than we calculate per piece cost but there we can assume that shipping cost is a one time amount for all products not effected by quantity of products.

Now Cost of goods sold is

Manufacture Cost + Research Development Cost + Shipping Cost

$(341600+110000+35000) = $486600

3. Net income is sales-cost of goods sold

Here sales is $1024800

and cost of goods sold is $(427000+110000+35000)

so net income is 1024800-572000= $452800

Note here Manufacture cost is for all products because cost was incurred for all products for manufacturing company irrespective of goods sold.

4. inventory is 20% because 80$ are sold then remaining is inventory unsold so 20% of 7000 toys = 1400 toys and price is cost of 1400 Toys =


Related Solutions

Maxwell Company manufactures and sells a single product. The following costs were incurred during 2014, the company’s first year of operations:
3.        Variable and Absorption Costing Follow the directions below and answer the following problem. Maxwell Company manufactures and sells a single product. The following costs were incurred during 2014, the company’s first year of operations:                     Variable Costs per Unit:                               Production:                                        Direct Materials                                            $16                                        Direct Labor                                                     8                                        Variable Manufacturing Overhead                  2                               Selling and Administrative                                        4                     Fixed Costs per Year:                               Manufacturing Overhead                            $ 140,000                               Selling and Administrative                             110,000 During 2014, the company produced 20,000 units and sold 18,000 units. The selling price...
During the first month of its current fiscal year, Green Co. incurred repair costs of $19,000...
During the first month of its current fiscal year, Green Co. incurred repair costs of $19,000 on a machine that had 4 years of remaining depreciable life. The repair cost was inappropriately capitalized. Green Co. reported operating income of $169,000 for the current year. Required: a. Assuming that Green Co. took a full year's straight-line depreciation expense in the current year, calculate the operating income that should have been reported for the current year. b. Assume that Green Co.'s total...
During the first month of its current fiscal year, Green Co. incurred repair costs of $16,000...
During the first month of its current fiscal year, Green Co. incurred repair costs of $16,000 on a machine that had 4 years of remaining depreciable life. The repair cost was inappropriately capitalized. Green Co. reported operating income of $164,000 for the current year. Required: a. Assuming that Green Co. took a full year's straight-line depreciation expense in the current year, calculate the operating income that should have been reported for the current year. Operating Income b. Assume that Green...
During the first month of its current fiscal year, Green Co. incurred repair costs of $24,000...
During the first month of its current fiscal year, Green Co. incurred repair costs of $24,000 on a machine that had 4 years of remaining depreciable life. The repair cost was inappropriately capitalized. Green Co. reported operating income of $164,000 for the current year. a. Assuming that Green Co. took a full year's straight-line depreciation expense in the current year, calculate the operating income that should have been reported for the current year. b. Assume that Green Co.'s total assets...
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (18,600 units): Direct materials $172,100 Direct labor 234,800 Variable factory overhead 267,600 Fixed factory overhead 100,300 $774,800 Operating expenses: Variable operating expenses $131,500 Fixed operating expenses 46,900 178,400 If 1,800 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? The actual price for a product was...
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (18,100 units): Direct materials $171,800 Direct labor 220,400 Variable factory overhead 256,100 Fixed factory overhead 102,000 $750,300 Operating expenses: Variable operating expenses $128,600 Fixed operating expenses 43,000 171,600 If 1,600 units remain unsold at the end of the month and sales total $1,143,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?...
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units):   Direct materials $170,000   Direct labor 360,000   Variable factory overhead 190,000   Fixed factory overhead     50,000 $770,000 Operating expenses:   Variable operating expenses $ 60,000   Fixed operating expenses     18,000 78,000 If 500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a.$41,500 b.$42,800 c.$38,500 d.$36,000
A business operated at 100% of capacity during its first month and incurred the following costs:...
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials-$70,000 Direct labor-20,000 Variable factory overhead-10,000 Fixed factory overhead-20,000 total $102,000 Operating expenses: Variable operating expenses-$17,000 Fixed operating expenses-1,000 total $18000 Prepare a variable income statement assuming 1000 units remain unsold at the end of the month and sales total $160,000 for the month
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 11 Direct labor $ 5 Variable manufacturing overhead $ 2 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 350,000 Fixed selling and administrative $ 260,000 During...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 11 Direct labor $ 8 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 420,000 Fixed selling and administrative $ 330,000 During the year, the company produced 30,000 units and sold 25,000 units. The selling price of the company’s product is $54...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT