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 21,200 portable grills, 58,300 stationary grills, and 5,300 smokers. Information on the three models is as follows:

Total fixed cost is $2,358,760.

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.

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

• Each T-shirt is expected to sell for $24.
• The purchasing manager buys the T-shirts for $10 each.
• The company needs to have enough T-shirts on hand at the end of each quarter to fill 34 percent of the next quarter’s sales demand.
• Selling and administrative expenses are budgeted at $98,000 per quarter plus 14 percent of total sales revenue.

Required:
1. Determine budgeted sales revenue for each quarter.



2. Determine budgeted cost of merchandise purchased for each quarter.



3. Determine budgeted cost of good sold for each quarter.



4. Determine selling and administrative expenses for each quarter.



5. Complete the budgeted income statement for each quarter.

Preparing a Single-Step and a Multiple-Step Income Statement

The following selected items are taken from the adjusted trial balance of Amick Corp. at December 31, 2020.

Required

a. Prepare a single-step income statement (including earnings per share). Include income taxes in its own section.

b. Prepare a multiple-step income statement (including earnings per share).

• Enter revenues and gains and expenses and losses in the order of the largest dollar amount to the smallest dollar amount.
• Do not use negative signs with any of your answers.
• Round the per share amount to two decimal places.

Owen limited uses a standard costing system. The standard cost card for one product is shown below.

Direct material                  4kg @$5 per kg                                 20

Direct labour                      2 hour @ $8 per hour                     16

Variable overhead           2 hours @ $3.5 per hour               7

Total variable cost                                                                            43

Fixed overhead                 2 hours @ $7 per hour                   14

Total production cost                                                                     57

Standard selling price                                                                     70

Standard profit margin                                                                   13

The budgeted output and sales was 1000 units. Actual production and sales for the period were 1300 units.

Actual cost and revenue were as follows.

Direct material                  5000 kg costing                                 22,700

Direct labour                      2,850 hours costing                         21,500

Variable overhead                                                                           7,800

Fixed overhead                                                                                 14,600

Sales revenue                   1,300 units @ $68                            88,400

Required:

Calculate the following variances

1. Material usage and price
2. Labour efficiency and rate
3. Variable overheads efficiency and expenditure
4. Fixed overhead efficiency, capacity and expenditure
5. Sales price and sale volume

2. The table below illustrates the quantity of output (in units) and total cost (TC, in MYR) for a perfectly competitive firm that can sell its output at MYR 9 per unit.

a. Calculate the total variable cost (TVC), average total cost (ATC), average variable cost (AVC), marginal cost (MC), total revenue (TR), marginal revenue (MR) and profit or loss at every levels of quantity. Fill in the blank entries. Show your calculations.

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

b. Determine the profit maximizing level of output and the amount of economic profit the firm is making at current price of MYR 9.

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

c. Determine whether the firm will produce or not in the short run, given the following price levels. Calculate the amount of profit or loss at each level.

1. At a market product price of MYR 3.

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

2. At a market product price of MYR 16.

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

[Total: 15 marks]

1.Consider a firm that operates in a perfectly competitive market. The firm is producing at its profit maximizing output level.  If this is true, then

2.In order to make the shut-down decision, a perfectly competitive firm compares

3.In exiting decisions, a perfectly competitive firm compares the

4.Total cost = Average Total Cost x Quantity

a.True

b.False

5. A restaurant, which operates in a perfectly competitive market, is evaluating whether it should serve breakfast on a daily basis.  It would choose to do this when its revenues cover its variable costs.

a. True

b. False

Imagine a monopoly producer in the computer industry called Megasoft. The market demand for computer products and the total cost at each level of output is given below. Fixed costs equal $140,000. Fill in the rest of the table and answer the following questions:

1. Is Megasoft a perfectly competitive firm? How can you tell?

2. What is the profit maximizing level of output for Megasoft? How can you tell?

3. How does Megasoft decide what price to charge?

4. What are the firm’s profits?

1.A single-price monopolist is a monopolist that sells each unit of its output for the same price to all its customers. At its profit-maximizing output level, the single-price monopolist produces where price is ___________ than marginal cost because for it price is __________ than marginal revenue and its demand curve lies __________ its marginal revenue curve.

less; less; below

greater; greater; above

greater; greater; below

less; less; above

greater; less; below

2.

Exhibit 2

A single-price monopolist is a monopolist that sells each unit of its output for the same price to all its customers. Refer to Exhibit 2. A single-price monopolist earns a total profit of __________ when it produces the profit maximizing level of output.

Group of answer choices

$120

$110

$180

$80

$49

Background Information: 1 The company started when it acquired $55,000 cash issuing common stock 2 Purchased a new industrial oven that cost $35,000 cash 3 Earned $75,000 in cash revenue 4 Paid $30,000 cash for salaries Expense 5 Adjustment for use of industrial oven. Purchased on January 2 ,2018 with a useful life of 4 years and salvage value of $4,000 Straight-line Depreciation was used of the entry on December 31,2018 a) Compete the accounting equation Goofy Company Accounting Equation Balance Sheet Income Statement Event Assets Accumulated Stockholders Equity Cash + Equipment - Depreciation = Common Stock + Retained Earnings Revenue - Expense = Net Income 1 $55,000 2 (35,000) 3 75,000 4 (30,000) 5 Total $65,000 + $- - $- = $- + $- $- - $- = $- b) What amount of depreciation expense should be reported on the 2018 income statement? c) What amount of accumulated depreciation would be reported on the 2019 Year-End Balance Sheet? Helpful Resources What Are the Main Types of Depreciation Methods? Capital Asset Depreciation - Straight-Line

3. Your investment banking client Uber is about to go public. You have gathered the following information concerning comparable companies whose stock is publicly traded:

IPO Pricing

1. Calculate the average values for each multiple.
2. Using these average multiples estimate the implied price for Uber’s shares assuming Uber’s earnings per share are $0.50, cash flow per share are $1.00, revenue per share is $4.90, and book value per share is $7.10.
3. Assuming all five companies are equally reliable comparables, estimate a fair value for Uber’s shares assuming they are trading in the market.
4. Deduct a 10% discount from this [freely traded] price to arrive at a price for Uber’s IPO. What is the purpose behind the 10% discount?