Events Income Statement Balance Sheet While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to prepaid insurance. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustments relating to the depreciation of plant assets. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to unearned revenue. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to an accrued expense. The failure to post the related adjusting entry will cause the following misstatements: While analyzing the adjusting entries at the end of the accounting period, the company overlooks the adjustment relating to an accrued revenue. The failure to post the related adjusting entry will cause the following misstatements: Slide 17 Slide 17
In: Accounting
1.1. Fill in the blanks in the following table using Excel formulas:
|
Q |
P |
TR |
TFC |
TVC |
AVC |
TC |
AC |
π |
MR |
MC |
Mπ |
|
0 |
311,250 |
0.00 |
|||||||||
|
10,000 |
47.5 |
475000 |
311250 |
120000 |
12.00 |
431250 |
43.13 |
47.5 |
43.125 |
||
|
20,000 |
45 |
9000000 |
311250 |
230000 |
11.50 |
541250 |
27.06 |
42.5 |
11 |
||
|
30,000 |
42.5 |
1275000 |
311250 |
380100 |
12.67 |
691350 |
23.05 |
37.5 |
15 |
||
|
40,000 |
40 |
1600000 |
311250 |
570000 |
14.25 |
881250 |
22.03 |
32.5 |
19 |
||
|
50,000 |
37.5 |
1875000 |
311250 |
800000 |
16.00 |
1111250 |
22.23 |
27.5 |
23 |
||
|
60,000 |
35 |
2100000 |
311250 |
1069800 |
17.83 |
1381050 |
23.02 |
22.5 |
27 |
||
|
70,000 |
32.5 |
2275000 |
311250 |
1379700 |
19.71 |
1690950 |
24.16 |
17.5 |
31 |
P=50-0.00025Q.
1.2. Construct line charts for the Average Cost (AC), Average Variable Cost (AVC), Marginal Cost (MC), Marginal Revenue (MR) and Average Revenue (AR) on a Cartesian coordinate system.
In: Economics
How many units would I need to sell to make a 30% profit for year 2 and a 40% profit for year three
Year 1 year 2 year 3
Sales Units 2500 2750 2900
sales Price Unit $150.00 $150.00 $150.00
REVENUE $375,000 $412,500 $435,000
Variable Costs:
Direct Materials $20.00 $20.50 $26.01
Direct Labor $17.15 $17.60 $19.22
Variable OH $2.50 $2.53 $2.55
Fixed Costs:
Rent 80,000 $80,000 $80,000
Supervision 200,000 $205,000 $210,250
Mixed Costs:
Utilites-Fixed 20,000 20,000 20,000
Utilities-Variable $2.50 $2.50 $2.50
Total Costs:
Variable cost per unit $42.15 $43.13 $50.28
Fixed Costs $300,000 $305,000 $310,250
Contribution Margin $107.85 $106.87 $99.72
72% 71% 150%
Breakeven:
Sales Units $2,781.64 $2,853.93 $3,111.21
Sales Revenue 375,000 412,500 435,000
Margin of Safety: $0 $0 $0
In: Accounting
Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. Company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 15 percent.
Segmented income statements appear as follows:
| Product | Original | Strawberry | Orange | ||||||
| Sales | $ | 33,200 | $ | 42,800 | $ | 51,300 | |||
| Variable costs | 23,240 | 38,520 | 41,040 | ||||||
| Contribution margin | $ | 9,960 | $ | 4,280 | $ | 10,260 | |||
| Fixed costs allocated to each product line | 4,700 | 5,500 | 7,500 | ||||||
| Operating profit (loss) | $ | 5,260 | $ | (1,220 | ) | $ | 2,760 | ||
Required:
a. Prepare a differential cost schedule.
|
b. Should Cotrone drop the Strawberry product line?
| Yes | |
| No |
In: Accounting
[The following information applies to the questions displayed below.] The following data pertain to the Aquarius Hotel Supply Company for the year just ended. Budgeted sales revenue
|
Budgeted sales revenue |
$ |
200,000 |
|
Budgeted manufacturing overhead |
364,000 |
|
|
Budgeted machine hours (based on practical capacity) |
10,000 |
|
|
Budgeted direct-labor hours (based on practical capacity) |
20,000 |
|
|
Budgeted direct-labor rate per hour |
13 |
|
|
Actual manufacturing overhead |
338,000 |
|
|
Actual machine hours |
11,000 |
|
|
Actual direct-labor hours |
18,000 |
|
|
Actual direct-labor rate per hour |
17 |
Required: 1. Compute the firm’s predetermined overhead rate for the year using each of the following common cost drivers: a. machine hours b. direct labor hours c. direct labor dollars
2. Calculate the overapplied or underapplied overhead for the year using each of the following cost drivers. a. machine hours b. direct labor hours c. direct labor dollars
In: Accounting
In: Economics
The unadjusted trial balance and related adjusting journal entries for McAfee Consulting Services is presented below (note: AJEs have been entered). Update account balances to complete the Adjusted Trial Balance. Then prepare the year-end CLASSIFIED Balance Sheet. Use $15,400 as the ending Retained Earnings balance. .
McAfee Consulting Services
Adjusted Trial Balance
For the Year Ended December 31, 2009
| Accounts | Trial Balance | adjustments | Adjusted trial blance | |
| Debit / Credit | Debit / Credit | |||
| Prepaid insurance | 1,200/ | / 300 (B) |
| office supplies | 800 / | /600 (A) | ||
| office equipment | 12,000/ | |||
| Accumulated depreciation | / 1,000 | /1,000 (D) |
| accounts payable | /3,500 | |||
| salaries payable | /900 (E) | |||
| unearned service revenue | /4,300 | 2,000 (C) / |
| retained earnings | /14,200 | |||
| dividens | 4,500/ | |||
| service revenue | /12,500 | /2,000 (C) |
| Salaries expense | 6,000/ | 900 (E) / | ||
| depreciation expense | 1,000 (D) / | |||
| supplies expense | 600 (A) / |
| Insurance expense | 300(B) / | |||
| Cash | 11,000/ | |||
| Total | 35,500/ 35,500 |
In: Accounting
Writing Wellman Company acquired 30% of the outstanding common stock of Grinwold Inc. on January 1, 2022, by paying $1,800,000 for 60,000 shares. Grinwold declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2022. Grinwold reported a net income of $800,000 for the year. a. Total dividend revenue for 2022 $60,000 b. Revenue from stock investments $240,000 Instructions a. Prepare the journal entries for Wellman Company for 2022, assuming Wellman cannot exercise significant influence over Grinwold. (Use the cost method.) b. Prepare the journal entries for Wellman Company for 2022, assuming Wellman can exercise significant influence over Grinwold. (Use the equity method.) c. The board of directors of Wellman Company is confused about the differences between the cost and equity methods. Prepare a memorandum for the board that explains each method and shows in tabular form the account balances under each method at December 31, 2022.
In: Accounting
| Two people have come to your restaurant with different offers. | ||||||
| Sam | "I'll sell you a brand new soft-serve ice cream machine. It'll cost $4,000 and should provide you with an extra $1,000 of revenue every year. You'll only have to pay about $100/year to maintain it, and it should last for nine years. | |||||
| Ella | "I run a party venue just down the street from your restaurant. I'll charge you $10,000 to put signage up in the venue, and you can become my preferred caterer for weddings, bar mitzvahs, etc. I bet I can get you $50,000 of additional revenue every year, and I know your contribution margin is around 10%. Let's say this arrangement will last for five years." | |||||
| Your required rate of return is 7%. | ||||||
| 1 | What's the payback period for each of these offers? | |||||
| 2 | What's the NPV of each of these offers? | |||||
| 3 | What's the approximate IRR of each of these offers? | |||||
In: Accounting
| Stretch Inc. sells both yoga pants and yoga mats. Managers for Stretch are concerned about their operating losses. They are considering dropping their yoga mat product line. Operating income by prouct line is shown below. Prepare a new operating income analysis assuming Stretch will only sell yoga pants. Then explain why Stretch should drop the yoga mat product line. | |||||
| Stretch Inc. | |||||
| Income Statement | |||||
| For year ended December 31, 2017 | |||||
| Total | Yoga Pants | Yoga Mats | |||
| Sales Revenue | $ 425,000 | $ 299,000 | $ 126,000 | ||
| Variable Costs | 221,000 | 136,000 | 85,000 | ||
| Contribution Margin | 204,000 | 163,000 | 41,000 | ||
| Fixed Costs: | |||||
| Fixed Manufacturing | 123,000 | 62,000 | 61,000 | ||
| Selling & Administrative | 58,000 | 46,000 | 12,000 | ||
| Operating Income | 23,000 | 55,000 | (32,000) | ||
| Stretch Inc. | |||||
| Income Statement | |||||
| For year ended December 31, 2017 | |||||
| Total | |||||
| Sales Revenue | |||||
| Variable Costs | |||||
| Contribution Margin | |||||
| Fixed Costs: | |||||
| Fixed Manufacturing | |||||
| Selling & Administrative | |||||
| Operating Income | |||||
| Explanation: | |||||
In: Accounting