Wolsey Industries Inc. expects to maintain the same inventories at the end of 2016 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:
|
1 |
Estimated Fixed Cost |
Estimated Variable Cost (per unit sold) |
|
|
2 |
Production costs: |
||
|
3 |
Direct materials |
— |
$58.00 |
|
4 |
Direct labor |
— |
38.00 |
|
5 |
Factory overhead |
$194,000.00 |
20.00 |
|
6 |
Selling expenses: |
||
|
7 |
Sales salaries and commissions |
102,000.00 |
8.00 |
|
8 |
Advertising |
42,000.00 |
— |
|
9 |
Travel |
8,000.00 |
— |
|
10 |
Miscellaneous selling expense |
7,800.00 |
1.00 |
|
11 |
Administrative expenses: |
||
|
12 |
Office and officers’ salaries |
135,200.00 |
— |
|
13 |
Supplies |
10,000.00 |
2.00 |
|
14 |
Miscellaneous administrative expense |
14,600.00 |
1.00 |
|
15 |
Total |
$513,600.00 |
$128.00 |
It is expected that 21,400 units will be sold at a price of $160 a unit. Maximum sales within the relevant range are 26,000 units.
| Required: | |
| A. | Prepare an estimated income statement for 2016. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. |
| B. | What is the expected contribution margin ratio? |
| C. | Determine the break-even sales in units and dollars. Round your answers to the nearest whole number. |
| D. | Construct a cost-volume-profit chart on your own paper. What is the break-even sales? |
| E. | What is the expected margin of safety in dollars and as a percentage of sales? Round your answers to the nearest whole number. |
| F. | Determine the operating leverage. Round to one decimal place. |
Income Statement
A. Prepare an estimated income statement for 2016. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries.
|
Wolsey Industries Inc. |
|
Estimated Income Statement |
|
For the Year Ended December 31, 2016 |
|
1 |
||||
|
2 |
||||
|
3 |
||||
|
4 |
||||
|
5 |
||||
|
6 |
||||
|
7 |
||||
|
8 |
||||
|
9 |
Selling expenses: |
|||
|
10 |
||||
|
11 |
||||
|
12 |
||||
|
13 |
||||
|
14 |
||||
|
15 |
Administrative expenses: |
|||
|
16 |
||||
|
17 |
||||
|
18 |
||||
|
19 |
||||
|
20 |
Total expenses |
|||
|
21 |
Additional Questions
B. What is the expected contribution margin ratio?
C. Determine the break-even sales in units and dollars. Start by using the contribution margin ratio (part B.) and then round your answers to the nearest whole number.
| Units | units |
| Dollars | $ |
D. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
$
Final Questions
E. What is the expected margin of safety in dollars and as a percentage of sales? If applicable, use amounts previously computed and then round your answers to the nearest whole number.
| Dollars | $ |
| Percentage |
F. Determine the operating leverage. Round to one decimal place.
| Labels and Amount Descriptions | |
| Advertising | |
| Contribution margin | |
| Cost of goods sold | |
| Direct labor | |
| Direct materials | |
| Expenses | |
| Factory overhead | |
| Gross profit | |
| Income from operations | |
| Manufacturing margin | |
| Miscellaneous administrative expense | |
| Miscellaneous selling expense | |
| Office and officers’ salaries | |
| Sales | |
| Sales salaries and commissions | |
| Supplies | |
| Total administrative expenses | |
| Total expenses | |
| Total selling expenses | |
| Travel | |
| Variable cost of goods sold |
In: Accounting
A 67.2 g sample of a gold and palladium alloy contains 3.43×1023 atoms .
1) What is the mass percentage of the gold in the alloy?
2) What is the mass percentage of the palladium in the alloy?
In: Chemistry
In: Finance
|
Bond J has a coupon rate of 5 percent. Bond K has a coupon rate of 10 percent. Both bonds have 9 years to maturity, make semiannual payments, and have a YTM of 6 percent. |
|
A. If interest rates suddenly rise by 3 percent, what is the percentage price change of Bond J? B. If interest rates suddenly rise by 3 percent, what is the percentage price change of Bond K?
|
In: Finance
Bond J is a 5 percent coupon bond. Bond K is a 11 percent coupon bond. Both bonds have 10 years to maturity, make semiannual payments, and have a YTM of 7 percent. Requirement 1: (a) If interest rates suddenly rise by 3 percent, what is the percentage price change of Bond J? (b) If interest rates suddenly rise by 3 percent, what is the percentage price change of Bond K? Requirement 2: (a) If interest rates suddenly fall by 3 percent, what is the percentage price change of Bond J? (b) If interest rates suddenly fall by 3 percent, what is the percentage price change of Bond K?
In: Finance
Bond J is a 4 percent coupon bond. Bond K is a 9 percent coupon bond. Both bonds have 8 years to maturity, make semiannual payments, and have a YTM of 9 percent. Requirement 1: (a) If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond J? (b) If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond K? Requirement 2: (a) If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond J? (b) If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond K?
In: Finance
Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 10 percent. Both bonds have 6 years to maturity, make semiannual payments, and have a YTM of 8 percent.
a. If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond J?
b. If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond K?
c. If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond J?
d. If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond k?
In: Finance
The price of shares of the Continental Bank at the end of trading each day for the last year followed the normal distribution. Assume there were 240 trading days in the year. The mean price was $42.00 per share and the standard deviation was $2.25 per share. Refer to the table in Appendix B.1. (Round the final answers to 2 decimal places.)
a-1. What percentage of the days was the price over $45.00?
Percentage of days ________ %
a-2. How many days would you estimate?
Number of days ______
b. What percentage of the days was the price between $38.00 and $40.00?
Percentage of days _______ %
c. What was the minimum price of the stock on the highest 15 days of the year?
Stocks price ________ $
In: Statistics and Probability
As a newly hired manager of a company that provides cell phone service, you want to determine the percentage of adults in your state who live in a household with cell phones and no land-line phones. How many adults must you survey? Assume that you want to be 90% confident that the sample percentage is within 4 percentage points of the true population percentage.
In a test of effectiveness of garlic for lowering cholesterol, 47 subjects were treated with Garlicin, which is garlic in a processed tablet form. Cholesterol levels were measured before and after the treatment. The changes in their levels of LDL cholesterol (in mg/dL) have a mean of 3.2 and a standard deviation of 18.6.
In: Statistics and Probability
Both Bond A and Bond B have 9 % coupons, make semiannual payments, and are priced at par value. Bond A has 5 years to maturity, whereas Bond B has 16 years to maturity.
A) If interest rates suddenly rise by 4 percent, what is the percentage change in the price of A?
B) If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond B?
|
C) If rates were to suddenly fall by 4 percent instead, what would the percentage change in the price of Bond A be? |
| D) If rates were to suddenly fall by 4 percent instead, what would the percentage change in the price of Bond B be then? |
In: Finance