Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 19,200 portable grills, 52,800 stationary grills, and 4,800 smokers. Information on the three models is as follows:
| Portable | Stationary | Smokers | |
|---|---|---|---|
| Price | $87 | $198 | $252 |
| Variable cost | |||
| per unit | 43 | 133 | 145 |
Total fixed cost is $2,145,700.
| Required: | |
| 1. | What is the sales mix of portable grills to stationary grills to smokers? |
| 2. | Compute the break-even quantity of each product. |
| 3. | Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar. |
| 4. | Compute the margin of safety for the coming year. |
Sales Mix and Breakeven
1. What is the sales mix of portable grills to stationary grills to smokers?
2. Compute the break-even quantity of each product.
| Break-Even Portable Grills | |
| Break-Even Stationary Grills | |
| Break-Even Smokers |
3(a) What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar.
| Contribution Margin Ratio | % |
| Break-Even Revenue |
Contribution Margin Income Statement
3(b) Prepare an income statement for Texas-Q for the coming year. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement.
|
Texas-Q Company |
|
Income Statement |
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For the Coming Year |
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1 |
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2 |
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|
3 |
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|
4 |
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|
5 |
Margin of Safety
4. Compute the margin of safety for the coming year.
The margin of safety for the coming year is .
In: Accounting
Download the Applying Excel form and enter formulas in all cells that contain question marks.
For example, in cell B30 enter the formula "= B20".
Notes:
In the text, variances are always displayed as positive numbers. To accomplish this, you can use the ABS() function in Excel. For example, the formula in cell C31 would be "=ABS(E31−B31)".
Cells D31 through D39 and G31 through G39 already contain formulas to compute and display whether variances are Favorable or Unfavorable. Do not enter data or formulas into those cells—if you do, you will overwrite these formulas.
After entering formulas in all of the cells that contained question marks, verify that the amounts match the numbers in the example in the text.
Check your worksheet by changing the revenue in cell D4 to $16.00; the cost of ingredients in cell D5 to $6.50; and the wages and salaries in cell B6 to $10,000. The activity variance for net operating income should now be $850 U and the spending variance for total expenses should be $410 U. If you do not get these answers, find the errors in your worksheet and correct them.
Save your completed Applying Excel form to your computer and then upload it here by clicking “Browse.” Next, click “Save.” You will use this worksheet to answer the questions in Part 2.
| Chapter 9: Applying Excel | |||||||
| Data | |||||||
| Revenue | $16.50 | q | |||||
| Cost of ingredients | $6.25 | q | |||||
| Wages and salaries | $10,400 | ||||||
| Utilities | $800 | + | $0.20 | q | |||
| Rent | $2,200 | ||||||
| Miscellaneous | $600 | + | $0.80 | q | |||
| Actual results: | |||||||
| Revenue | $27,920 | ||||||
| Cost of ingredients | $11,110 | ||||||
| Wages and salaries | $10,130 | ||||||
| Utilities | $1,080 | ||||||
| Rent | $2,200 | ||||||
| Miscellaneous | $2,240 | ||||||
| Planning budget activity | 1,800 | meals served | |||||
| Actual activity | 1,700 | meals served | |||||
| Enter a formula into each of the cells marked with a ? below | |||||||
| Review Problem: Variance Analysis Using a Flexible Budget | |||||||
| Construct a flexible budget performance report | |||||||
| Revenue | |||||||
| and | |||||||
| Actual | Spending | Flexible | Activity | Planning | |||
| Results | Variances | Budget | Variances | Budget | |||
| Meals served | ? | ? | ? | ||||
| Revenue | ? | ? | ? | ? | ? | ||
| Expenses: | |||||||
| Cost of ingredients | ? | ? | ? | ? | ? | ||
| Wages and salaries | ? | ? | ? | ? | ? | ||
| Utilities | ? | ? | ? | ? | ? | ||
| Rent | ? | ? | ? | ? | ? | ||
| Miscellaneous | ? | ? | ? | ? | ? | ||
| Total expenses | ? | ? | ? | ? | ? | ||
| Net operating income | ? | ? | ? | ? | ? | ||
In: Accounting
Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,600,000. The building was completed on December 31, 2023. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-2021 At 12-31-2022 At 12-31-2023 Percentage of completion 10 % 60 % 100 % Costs incurred to date $ 369,000 $ 2,940,000 $ 4,960,000 Estimated costs to complete 3,321,000 1,960,000 0 Billings to Axelrod, to date 730,000 2,370,000 4,600,000 Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs.
Complete this question by entering your answers in the tabs below.
1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. (Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.)
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In: Accounting
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The Gourmand Cooking School runs short cooking courses at its small campus. Management has identified two cost drivers that it uses in its budgeting and performance reports—the number of courses and the total number of students. For example, the school might run two courses in a month and have a total of 63 students enrolled in those two courses. Data concerning the company’s cost formulas appear below: |
| Fixed Cost per Month | Cost per Course |
Cost per Student |
||||
| Instructor wages | $ | 2,940 | ||||
| Classroom supplies | $ | 310 | ||||
| Utilities | $ | 1,230 | $ | 75 | ||
| Campus rent | $ | 4,700 | ||||
| Insurance | $ | 2,300 | ||||
| Administrative expenses | $ | 3,700 | $ | 44 | $ | 6 |
|
For example, administrative expenses should be $3,700 per month plus $44 per course plus $6 per student. The company’s sales should average $870 per student. |
| The actual operating results for September appear below: |
| Actual | ||
| Revenue | $ | 51,910 |
| Instructor wages | $ | 11,040 |
| Classroom supplies | $ | 19,380 |
| Utilities | $ | 1,940 |
| Campus rent | $ | 4,700 |
| Insurance | $ | 2,440 |
| Administrative expenses | $ | 3,680 |
| Required: | |
| A. |
The Gourmand Cooking School expects to run four courses with a total of 63 students in September. Complete the company’s planning budget for this level of activity. |
|
Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense: Net operating income: |
|
| B. |
The school actually ran four courses with a total of 53 students in September. Complete the company’s flexible budget for this level of activity. |
|
Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense: Net operating income: |
| 3. |
Calculate the revenue and spending variances for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Expenses: Instructor wages Classroom supplies Utilities Campus rent Insurance Administrative expenses Total expense: Net operating income: |
In: Accounting
Larry Hoover is the owner and operator of Hoover’ s Merchandizing Company and the company has presented the following unadjusted trial balance at the end of their financial year ending December 31, 2016.
Hoover’s Merchandizing Company
Trial Balance as at December 31, 2016
|
A/C Name |
DR $ |
CR $ |
|
Cash |
1,500,000 |
|
|
Accounts Receivable |
4,580,000 |
|
|
Interest Receivable |
||
|
Merchandise Inventory |
5,400,054 |
|
|
Prepaid Insurance |
1,200,000 |
|
|
Furniture and Equipment |
6,000,000 |
|
|
Accumulated Depreciation –Furniture/Equipment |
1,770,000 |
|
|
Accounts Payable |
1,450,000 |
|
|
Sales Commission Payable |
||
|
Salaries Payable |
||
|
Unearned Sales Revenue |
6,400,054 |
|
|
Larry Hoover, Capital |
8,000,000 |
|
|
Larry Hoover, Withdrawal |
1,000,000 |
|
|
Sales Revenue Earned |
21,668,000 |
|
|
Interest Revenue |
||
|
Sales Discount |
115,000 |
|
|
Sales Returns and Allowances |
248,000 |
|
|
Cost of Goods Sold |
9,210,000 |
|
|
Travelling Expense |
225,000 |
|
|
Sales Commission Expense |
2,150,000 |
|
|
Salaries Expense |
4,500,000 |
|
|
Rent Expense |
1,800,000 |
|
|
Utilities Expense |
849,000 |
|
|
Depreciation Expense-Furniture/Equipment |
||
|
Insurance Expense |
||
|
Advertising Expense |
345,000 |
|
|
General Expense |
166,000 |
__________ |
|
Total |
39,288,054 |
39,288,054 |
The following additional information was made available at December 31, 2016
Interest revenue earned at December 31, 2016 but not yet recorded $250,000.
Insurance prepaid includes an expired amount of $1,000,000 relating to the period January to December 31, 2016.
Furniture and Equipment has an estimated life of ten (10) years and is being depreciated on the straight-line method of depreciation, down to a residual value of $100,000.
Unearned sales revenue still unearned as at December 31, 2016 amounts to $2,400,054.
Salaries expense owing as December 31, 2016 amounts to $450,000
Accrued sales commission expense as at December 31, 2016 amounts to $450,000.
Inventory on hand was $5,500,000 as at December 31, 2016.
Required:
Prepare the necessary adjusting journal entries on December 31, 2016
Prepare Hoover’s Merchandizing Company multiple-step income statement for the year ended December 31, 2016.
Prepare the company’s statement of owner’s equity for the year ended December 31, 2016
Prepare the company’s classified balance sheet at December 31, 2016
In: Accounting
Mike Right is the owner and operator of Right’ s Merchandizing Company and the company has presented the following unadjusted trial balance at the end of their financial year ending December 31, 2016.
Right’s Merchandizing Company
Trial Balance as at December 31, 2016
|
A/C Name |
DR $ |
CR $ |
|
Cash |
1,500,000 |
|
|
Accounts Receivable |
4,580,000 |
|
|
Interest Receivable |
||
|
Merchandise Inventory |
5,400,054 |
|
|
Prepaid Insurance |
1,200,000 |
|
|
Furniture and Equipment |
6,000,000 |
|
|
Accumulated Depreciation –Furniture/Equipment |
1,770,000 |
|
|
Accounts Payable |
1,450,000 |
|
|
Sales Commission Payable |
||
|
Salaries Payable |
||
|
Unearned Sales Revenue |
6,400,054 |
|
|
Mike Right, Capital |
8,000,000 |
|
|
Mike Right, Withdrawal |
1,000,000 |
|
|
Sales Revenue Earned |
21,668,000 |
|
|
Interest Revenue |
||
|
Sales Discount |
115,000 |
|
|
Sales Returns and Allowances |
248,000 |
|
|
Cost of Goods Sold |
9,210,000 |
|
|
Travelling Expense |
225,000 |
|
|
Sales Commission Expense |
2,150,000 |
|
|
Salaries Expense |
4,500,000 |
|
|
Rent Expense |
1,800,000 |
|
|
Utilities Expense |
849,000 |
|
|
Depreciation Expense-Furniture/Equipment |
||
|
Insurance Expense |
||
|
Advertising Expense |
345,000 |
|
|
General Expense |
166,000 |
__________ |
|
Total |
39,288,054 |
39,288,054 |
The following additional information was made available at December 31, 2016
Interest revenue earned at December 31, 2016 but not yet recorded $250,000.
Insurance prepaid includes an expired amount of $1,000,000 relating to the period January to December 31, 2016.
Furniture and Equipment has an estimated life of ten (10) years and is being depreciated on the straight-line method of depreciation, down to a residual value of $100,000.
Unearned sales revenue still unearned as at December 31, 2016 amounts to $2,400,054.
Salaries expense owing as December 31, 2016 amounts to $450,000
Accrued sales commission expense as at December 31, 2016 amounts to $450,000.
Inventory on hand was $5,500,000 as at December 31, 2016.
Required:
Prepare the necessary adjusting journal entries on December 31, 2016
Prepare Right’s Merchandizing Company multiple-step income statement for the year ended December 31, 2016.
Prepare the company’s statement of owner’s equity for the year ended December 31, 2016
Prepare the company’s classified balance sheet at December 31, 2016
In: Accounting
Initial Investment: $1,000,000
WACC: 10%
Revenue: 850,000
COGS: $540,000
Operating Expenses: $50,000
Depreciation Expense: $125,000
Tax Expense: $28,350
What is Profit Margin?
In: Finance
Which of the following has the least tax authority in the U.S.?
Group of answer choices
Treasury Regulations
Tax professional opinion
Tax return instructions
Internal Revenue Code
In: Finance
Which one of the following transactions does NOT involve a cash flow?
A prepayment of insurance
B issue of shares
C issue of bonus shares
D revenue received in advance
In: Accounting
The response should be 2 to 3 paragraphs for the following question.
What is the difference between general obligation bonds and revenue bonds? What are the advantages and disadvantages of each? Give an example
In: Finance