Financial statements of a manufacturing firm
The following events took place for Sorensen Manufacturing Company during January, the first month of its operations as a producer of digital video monitors:
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
Open spreadsheet
Using the information given, complete the following:
Prepare the January income statement for Sorensen Manufacturing Company. Round your answers to the nearest dollar.
| Sorensen Manufacturing Company | ||
| Income Statement | ||
| For the Month Ended January 31 | ||
| $ | ||
| $ | ||
| Operating expenses: | ||
| $ | ||
| Total operating expenses | ||
| $ | ||
Determine the inventory balances at the end of the first month of operations. Round your answers to the nearest dollar.
| Sorensen Manufacturing Company | |
| Inventory Balances | |
| For the Month Ended January 31 | |
| Inventory balances on January 31: | |
| Materials | $ |
| Work in process | $ |
| Finished goods | $ |
In: Accounting
Sandhill Company has the following information available for September 2020.
| Unit selling price of video game consoles | $480 | |
| Unit variable costs | $288 | |
| Total fixed costs | $57,600 | |
| Units sold | 600 |
Part 1
Compute the unit contribution margin.
| Unit contribution margin | enter the unit contribution margin |
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Part 2
Prepare a CVP income statement that shows both total and per unit amounts.
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SANDHILL COMPANY |
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|---|---|---|---|---|
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Total |
Per Unit |
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| select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
$enter a dollar amount |
$enter a dollar amount |
||
| select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
enter a dollar amount |
enter a dollar amount |
||
| select a summarizing line for the first part Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
enter a total amount for the first part |
$enter a total amount per unit |
||
| select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
enter a dollar amount |
|||
| select a closing name for this statement Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
$enter a total net income or loss amount |
|||
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Part 3
Compute Sandhill’ break-even point in units.
| Break-even point in units | enter Break-even point in units | units |
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Part 4
Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.
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SANDHILL COMPANY |
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|---|---|---|---|---|
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Total |
Per Unit |
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| select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
$enter a dollar amount |
$enter a dollar amount |
||
| select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
enter a dollar amount |
enter a dollar amount |
||
| select a summarizing line for the first part Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
enter a total amount for the first part |
$enter a total amount per unit |
||
| select an income statement item Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
enter a dollar amount |
|||
| select a closing name for this statement Administrative ExpensesContribution MarginCost of Goods SoldFixed CostsGross ProfitNet Income/(Loss)SalesSelling ExpensesVariable Costs |
$enter a total net income or loss amount |
|||
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Submit Answer
In: Accounting
Do some research on the country of Ethiopia and discuss:
Who in the Ethiopian society has the most difficult time dealing with scarcity?
What do they need most?
How can their society provide for their wants and needs?
Why are they so impoverished?
What can their governments do to help, or hinder their country's development?
Could Ethiopia become a world-class producer and exporter of goods? How would Ethiopia compare with Japan? Japan is a country relatively POOR in natural resources, yet it is an economic world powerhouse. What are the differences between the two countries?
list references and 100 words or more
In: Economics
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials):
| Selling expenses | $ | 217,000 |
| Purchases of raw materials | $ | 260,000 |
| Direct labor | ? | |
| Administrative expenses | $ | 153,000 |
| Manufacturing overhead applied to work in process | $ | 372,000 |
| Actual manufacturing overhead cost | $ | 356,000 |
Inventory balances at the beginning and end of the year were as follows:
| Beginning of Year | End of Year | |||||
| Raw materials | $ | 52,000 | $ | 33,000 | ||
| Work in process | ? | $ | 24,000 | |||
| Finished goods | $ | 36,000 | ? | |||
The total manufacturing costs for the year were $685,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $663,000; and the net operating income was $37,000. The company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.
Required:
Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)
Complete this question by entering your answers in the tabs below.
In: Accounting
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $735,000 of total manufacturing overhead for an estimated activity level of 49,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
|
Machine-hours |
40,000 |
|
|
Manufacturing overhead cost |
$ |
693,000 |
|
Inventories at year-end: |
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Raw materials |
$ |
20,000 |
|
Work in process (includes overhead applied of $60,000) |
$ |
185,000 |
|
Finished goods (includes overhead applied of $102,000) |
$ |
314,500 |
|
Cost of goods sold (includes overhead applied of $438,000) |
$ |
1,350,500 |
Required:
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
4. How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
Compute the underapplied or overapplied overhead.
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Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Note: Enter debits before credits.
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Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Note: Enter debits before credits.
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How much higher or lower will net operating income be if the underapplied or overapplied overhead is allocated to Work in Process, Finished Goods, and Cost of Goods Sold rather than being closed to Cost of Goods Sold?
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In: Accounting
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Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the first quarter: |
| a. |
As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: |
| Debits | Credits | |||||
| Cash | $ | 50,000 | ||||
| Accounts receivable | 216,000 | |||||
| Inventory | 58,500 | |||||
| Buildings and equipment (net) | 365,000 | |||||
| Accounts payable | $ | 94,000 | ||||
| Capital shares | 490,000 | |||||
| Retained earnings | 105,500 | |||||
| $ | 689,500 | $ | 689,500 | |||
| b. | Actual sales for December and budgeted sales for the next four months are as follows: |
| December (actual) | $ | 270,000 | |
| January | 390,000 | ||
| February | 580,000 | ||
| March | 250,000 | ||
| April | 190,000 | ||
| c. |
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. |
| d. | The company’s gross margin is 40% of sales. |
| e. |
Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $71,000 per month; shipping, 5% of sales; depreciation, $15,000 per month; other expenses, 3% of sales. |
| f. |
At the end of each month, inventory is to be on hand equal to 25% of the following month’s sales needs, stated at cost. |
| g. |
One-half of a month’s inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. |
| h. |
During February, the company will purchase a new copy machine for $3,000 cash. During March, other equipment will be purchased for cash at a cost of $84,000. |
| i. | During January, the company will declare and pay $46,000 in cash dividends. |
| j. |
The company must maintain a minimum cash balance of $31,000. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) |
| Required: |
| Using the preceding data, complete the following statements and schedules for the first quarter: |
| 1. | Schedule of expected cash collections. |
| 2-a. | Inventory purchases budget. |
| 2-b. | Schedule of cash disbursements for purchases. |
| 3. | Schedule of cash disbursements for expenses. |
| 4. |
Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) |
In: Accounting
1. Which of the following is not a control to prevent check fraud?
MULTIPLE CHOICE
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a. Establish duties so the same person authorizes checks, signs them and reconciles the bank statement. |
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b. Reconcile the bank account when you get the statement. |
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c. Keep the check stock locked up. |
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d. Perform background checks in the hiring process. |
3. In a check tampering scheme the fraudster does not have to have physical access to the check.
MULTIPLE CHOICE
True or false
5. What is the purpose of a shell company?
MULTIPLE CHOICE
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a. It is a fictitious entity established for the purpose of committing fraud. |
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b. It is an entity established to pay minimal taxes. |
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c. It is an entity established to shield management from litigation. |
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d. It is an entity established so consumers will not know from whom they are purchasing goods. |
7. In order to accomplish a forged maker scheme an employee must do all of the following except:
MULTIPLE CHOICE
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a. Have access to the blank checks. |
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9. True or false? In a forged maker scheme the check has already been written.
MULTIPLE CHOICE
True
False
11. Why do most shell company schemes involve the purchase of services rather than goods?
MULTIPLE CHOICE
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a. When the billing scheme involves fictitious goods, the defrauded company may be able to detect the fraud by comparing purchases to inventory levels. |
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b. Services are more costly than goods. |
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c. Normally services go through a less stringent approval process as goods. |
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d. Most companies purchase more services than goods. |
12. True or False? Banks are always required to reimburse customers for forged checks.
13. In a concealed check scheme an employee prepares a fraudulent check and submits it usually along with legitimate checks to an authorized maker who signs it without a proper review.
True
False
In: Accounting
M5: Watson Activity
Watson, Inc. is a manufacturing firm. Its owner, Tom Watson, was worried about
the firm’s third quarter results because demand for its product has been
decreasing. However, he was pleasantly surprised to see that profit had actually
increased in the third quarter. Still, he has a nagging feeling that he’s missing
something important.
Watson, Inc.
Income Statements
2017
Q2
Q3
Q4
Sales volume
10,000
8,000
10,000
Sales revenue
$520,000
$416,000
$520,000
Cost of goods sold
350,000
240,000
590,000
Gross margin
170,000
176,000
(70,000)
Selling and administrative expenses
110,000
98,000
110,000
Net operating income
$60,000
$78,000
(180,000)
Production Levels
Q2
Q3
Q4
Actual production (units)
12,000
15,000
1,000
Cost information
Variable manufacturing cost
$10.00
per unit
Variable selling and administrative cost
$6.00
per unit
Fixed manufacturing overhead
$300,000
per qtr
Fixed selling and administrative cost
$50,000
per qrt
Other Information:
The company's selling price and cost structure have been stable for the last year
The company applies overhead based on actual production
The company uses LIFO for inventory costing
Beginning Inventory at the start of Q2—0 Units / $0
The company introduced Lean Production at the beginning of the fourth quarter,
resulting in zero ending inventory. The results for Q4 using absorption costing
are shown above.
10.
In memo form, summarize to Mr. Watson why he experienced such volatility in
profit under absorption costing when sales levels were relatively constant. Be
sure to include the advantages and disadvantages of using variable costing for
internal reporting purposes and how it applies to him.
In: Accounting
Required information
[The following information applies to the questions displayed below.]
Hamby Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Hamby Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 93,000 |
| Accounts receivable | 127,000 | |
| Inventory | 45,000 | |
| Plant and equipment, net of depreciation | 219,000 | |
| Total assets | $ | 484,000 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 80,000 |
| Common stock | 330,000 | |
| Retained earnings | 74,000 | |
| Total liabilities and stockholders’ equity | $ | 484,000 |
The company managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $300,000, $320,000, $310,000, and $330,000, respectively.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $56,000. Each month $6,000 of this total amount is depreciation expense and the remaining $50,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.
How much is the Company's expected cash collections in the month of August?
Multiple Choice
$195,000
$307,000
$208,000
$112,000
In: Accounting
Hamby Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Hamby Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 84,000 |
| Accounts receivable | 144,000 | |
| Inventory | 63,750 | |
| Plant and equipment, net of depreciation | 223,000 | |
| Total assets | $ | 514,750 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 84,000 |
| Common stock | 349,000 | |
| Retained earnings | 81,750 | |
| Total liabilities and stockholders’ equity | $ | 514,750 |
The company managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $340,000, $360,000, $350,000, and $370,000, respectively.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $44,000. Each month $6,000 of this total amount is depreciation expense and the remaining $38,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.
How much is the Company's expected merchandise purchases in the month of September?
Multiple Choice
$268,125
$258,750
$266,250
$331,875
In: Accounting