Question 1: Cost allocation

a) Allocate the fixed costs between products A and B. Use direct labor dollars as the cost driver.
allocation rate=$  per DL$
allocated costs for A=$
allocated costs for B=$

b) Compute the profit margins for products A and B:
profit margin for A=$
profit margin for B=$
Enter negative numbers with a minus sign, i.e., a loss of $1,000 should be entered as -1000, not as (1000) or ($1000).

c) Should you drop product A or product B in the short term? Why?

Keep both products -- both have positive contribution margin

Drop product A -- it has negative profit margin     

Drop product A -- it has negative contribution margin

Drop product A -- it has smaller contribution margin than product B

Should you drop product A or product B in the long term? Why?

Keep both products -- both have positive contribution margin

Drop product A -- it has negative profit margin    

Drop product A -- it has negative contribution margin

Drop product A -- it has smaller contribution margin than product B

d) If you drop product A in the short term,
    fixed costs will: remain the same decrease by $3,600

    profit will: decrease by $1,200 increase by $2,400


If you drop product A in the long term,
    fixed costs will: remain the same decrease by $3,600

    profit will: decrease by $1,200 increase by $2,400


e) Allocate the fixed costs between products A and B, using the number of units as the cost driver.
allocation rate=$  per unit
allocated costs for A=$
allocated costs for B=$
These allocated amounts are very different from what you got in part (a). In general, should we use the allocated costs from part (a) or from part (e)? Why?

use the allocated costs from (a) -- direct labor is always a better cost driver than the number of unitsuse the allocated costs from (e) -- the number of units is always a better cost driver than direct labor    it depends -- direct labor can be a better cost driver in some situations, and the number of units (or some other activity measure) can be a better cost driver in other situations

f) Suppose that a firm uses a labor-intensive production process. The most reasonable cost driver for manufacturing overhead costs is:

number of units

machine hours    

direct labor (measured in hours or dollars)

Suppose that a firm uses a machine-intensive production process. The most reasonable cost driver for manufacturing overhead costs is:

number of units

machine hours    

direct labor (measured in hours or dollars)

g) Suppose that a firm uses a machine-intensive process to make the components for the finished product and then uses a labor-intensive process to assemble the finished product. The firm wants to implement a refined cost allocation with two cost pools:
Pool 1: overhead costs related to the production of components (e.g., machine depreciation, rent for the factory building used to make the components, salaries of machine maintenance staff)
Pool 2: overhead costs related to the assembly of the finished product (e.g., depreciation on tools used by assembly workers, rent for the factory building used for assembly, salaries of labor supervisors)
The most reasonable cost drivers for the two pools are:

machine hours for both poolsmachine-hours for pool 1 and direct labor hours or dollars for pool 2    number of units for pool 1 and number of workers for pool 2direct labor hours or dollars for both pools

Break-Even in Sales Revenue, Variable-Costing Ratio, Contribution Margin Ratio, Margin of Safety

Hammond Company runs a driving range and golf shop. The budgeted income statement for the coming year is as follows.

Required:

1. What is Hammond’s variable cost ratio? Enter your answer as a decimal value rounded to two decimal places.

What is the contribution margin ratio? Enter your answer as a decimal value rounded to two decimal places. (Express as a decimal-based amount rather than a whole percent.)

2. Suppose Hammond’s actual revenues are $200,000 greater than budgeted. By how much will before-tax profits increase? Calculate the answer without preparing a new income statement.
$

3. How much sales revenue must Hammond earn in order to break even? Round your answer to the nearest dollar.
$

What is the expected margin of safety? Round your answer to the nearest dollar.
$

4. How much sales revenue must Hammond generate to earn a before-tax profit of $130,000? Round your answer to the nearest dollar.
$

How much sales revenue must Hammond generate to earn an after-tax profit of $90,000? Round your answer to the nearest dollar.
$

Prepare a contribution margin income statement to verify the accuracy of your last answer. Round your answers to the nearest dollar.

CP 14–8   Assume the following income statement and balance sheet information:

Service revenue (all cash)                   $175

Operating expenses Salaries (all cash)$ 85

Net income                                            $90

                                     2020 2019

Current assets

Cash                        $1,250 $1,600

Short‐term invest.         100      200

                               $1,350 $1,800

Liabilities

Borrowings                    600     1,000

Stockholders’ equity

Common stock              200       300

Retained earnings         550      500

                                      750       800

                                 $1,350   $1,800

Other information: The short‐term investments are riskless and will be converted to a known amount of cash in 60 days. Borrowings are non‐ current. No gain or loss occurred when common stock was repurchased.

Required:

1. Calculate cash flow from operating activities

.2.Prepare the 2020 statement of changes inequity

.3.Calculate cash flow from financing activities.

4 .(Appendix) Prepare a cash flow table. Show that cash effects net to a $450 outflow

Question 1: CVP relation

a) Compute the following items:
    price=    
    unit VC=    
    unit CM=  

b) Write down the CVP relation.
  Profit = ___________ * volume - __________
(e.g., if Profit=4*volume-1000, enter 4 in the first box and 1000 in the second box).

c) Predict profit at sales volume of 120 units:


d) Your boss gave you a profit target of $2,100. How many units do you need to sell to meet this target?


e) Compute the breakeven point:
    breakeven volume =  
    breakeven revenue =  

f) Compute the margin of safety at current sales volume of 100 units:

(e.g., if your answer is 20%, enter 20 without the % sign)
If sales decrease by 35%, will you lose money? YES / NO
If sales decrease by 45%, will you lose money? YES / NO


g) When sales volume increases by 10 units (from any initial level in the relevant range), profit increases by:

price*10 = $700

unit VC*10 = $400

not enough informationunit

CM*10 = $300

The company paid interest expense of

$17,200

for 2014 and had an overall tax rate of

40%

for 2014. Find the cash flow from assets for 2014, and break it into its three parts: operating cash flow, capital spending, and change in net working capital.

The operating cash flow is

$?

(Round to the nearest dollar.)

please answer with details:

Q- International Electronic Products Ltd. (IEP) have sales revenue of€365m p.a. earned evenly throughout the year. They offer all customers 30 days credit, half of whom adhere to the terms, while the other half takes an average of 70 days credit. The business is considering offering a 2% discount to all customers who adhere to the 30 days credit term. Market research shows that this 2% discount offer will result in half of those who pay in 70 days paying in 30 days, but the balance will still take 70 days. But importantly, the scheme is also expected to reduce bad debts by €300,000 per annum.

i- Calculate the cost / benefit of this proposal, if IEP are currently paying 12% per annum interest on a continuing overdraft of approx €50m.

ii- Comment on whether should IEP go ahead with the proposed scheme?

E-Cars is a Private Corporation. We have limited information however we have obtained
their financial statements.
Their Mission Statement is Below
E-Cars was founded by a group of engineers who wanted to prove that people didn’t need
to compromise to drive electric – that electric vehicles can be better, quicker and more fun
to drive than gasoline cars. E-Cars believe the faster the world stops relying on fossil fuels
and moves towards a zero-emission future, the better.
Case Study Answer
Analyze the financial statements and this document using everything you have learned in
this course.

.   

Above is the financial and market data for two companies A and B. Evaluate company A and B using multiple approach.analyze and provide observations based below two parameters.

a) P/E ratio

b) Price/Sales ratio

Calculate enterprise value(EV) of both companies and analyze on following parameters.

c) EV/EBIDTA

d)EV/Sales

Please provide Excel formula also for better understanding.

Income Statement

Year Ended July 31, 2018

Net Sales Revenue

$28,000

Cost of Goods Sold

10,800

Gross Profit

17,200

Operating Expenses:

Selling Expenses

$690

Administrative Expenses

1,550

Total Operating Expenses

2,240

Operating Income

14,960

Other Income and (Expenses):

Interest Expense

?

Total Other Income and (Expenses)

?

Net Income before Income Tax Expense

?

Income Tax Expense

2,810

Net Income

$ ?

The income statement for

UtahUtah

Communications follows. Assume

UtahUtah

Communications signed a​ 3-month,

9 %9%​,

$ 60 comma 000$60,000

note on

JuneJune

​1,

20182018​,

and that this was the only note payable for the company.

LOADING...

​(Click the icon to view the income​ statement.)

Requirements

Requirement 1. Fill in the missing information for

UtahUtah​'s

year ended

JulyJuly

3131​,

20182018​,

income statement. Round to the nearest dollar.​ (Use a​ 12-month year for interest computations. Use a minus sign or parentheses to enter other​ expenses.)

Requirement 2. Compute the​ times-interest-earned ratio for the company. Round to two decimals.

Select the formula and enter the amounts to compute the​ times-interest-earned ratio. ​(Round your answer to two decimal​ places, X.XX.)