You are the management accountant at one of the famous NWR resorts offering special packages for holidaymakers. Accommodation facilities are in the form of chalets with a capacity of five (5) family members per chalet. For the whole month of December 2019, it hosted 300 holidaymakers, which is only 95% of full capacity, and all Chalets were fully occupied. Package 1 has a daily rate of N$ 120.00 per person, Package 2 has a daily rate of N$ 200.00 per person, and the sales mix ratio is 60:40, respectively. Monthly variable costs are N$ 350 000 for package 1 and N$ 400 000 for package 2 with combined fixed costs of N$ 300 000.
Due to the Covid-19 impact on the tourism industry, revenue is projected to decrease by 30% and variable costs by 15%. Using the same information, how much revenue will be required to break even in the next month?
(NB: Round-off to the nearest whole number)
Select one:
a. N$500 000
b. N$352 020
c. N$600 000
d. None of all
e. N$750 000
In: Operations Management
Assignment 1 Recording Process Emily Valley is a licensed dentist. During the first month of the operation of her business, the following events and transactions occurred. April 1- Invested $20,000 cash in her business. 1 Hired a secretary-receptionist at a salary of $700 per week payable monthly. 2 Paid office rent for the month $1,100. 3 Purchased dental supplies on account from Dazzle Company $4,000. 10 Performed dental services and billed insurance companies $5,100. 11 Received $1,000 cash advance from Leah Mataruka for an implant. 20 Received $2,100 cash for services performed from Michael Santos. 30 Paid secretary-receptionist for the month $2,800. 30 Paid $2,400 to Dazzle for accounts payable due. Emily uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense. Instructions (a) Journalize the transactions. (b) Post to the ledger accounts. (c) Prepare a trial balance on April 30, 2014.
In: Accounting
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 20 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost.
Manufacturing overhead for year 1 totaled $800,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following:
| Chairs | Desks | |||||
| Sales revenue | $ | 1,150,000 | $ | 2,105,000 | ||
| Direct materials | 584,000 | 800,000 | ||||
| Direct labor | 160,000 | 340,000 | ||||
Required:
a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks.
a-2. Which of the two products should be dropped?
| Chairs | |
| Desks |
b. Regardless of your answer in requirement a, the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $650,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2? (Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).)
In: Accounting
In: Finance
The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 24 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||||||
| Investment | $ | 27,200 | ||||||||
| Sales revenue | $ | 14,300 | $ | 15,900 | $ | 17,300 | $ | 13,800 | ||
| Operating costs | 3,350 | 3,325 | 5,100 | 3,700 | ||||||
| Depreciation | 6,800 | 6,800 | 6,800 | 6,800 | ||||||
| Net working capital spending | 345 | 245 | 315 | 195 | ? | |||||
a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)
b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative amount should be indicated by a minus sign.)
c. Suppose the appropriate discount rate is 9 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
In: Finance
Earnings per Share and Multiple-Step Income
Statement
The following summarized data relate to Bowden Corporation’s
current operations:
| Sales revenue | $745,000 | |
| Cost of goods sold | 450,000 | |
| Selling expenses | 58,000 | |
| Administrative expenses | 72,000 | |
| Loss on sale of equipment | 5,000 | |
| Income tax expense | 64,000 | |
| Shares of common stock | ||
| Outstanding at January 1 | 15,000 | shares |
| Additional issued at May 1 | 7,000 | shares |
| Additional issued at November 1 | 2,000 | shares |
Required
Prepare a multiple-step income statement for Bowden Corporation for
the year. Include earnings per share disclosure at the bottom of
the income statement.
Do not use negative signs with any of your answers below.
| BOWDEN CORPORATION Income Statement For the Year Ended December 31 |
||
|---|---|---|
| Sales Revenue | Answer | |
| Cost of Goods Sold | Answer | |
| Gross Profit on Sales | Answer | |
| Selling Expenses | Answer | |
| Administrative Expenses | Answer | Answer |
| Operating Income | Answer | |
| Loss on Sale of Equipment | Answer | |
| Income before Taxes | Answer | |
| Income Tax Expense | Answer | |
| Net Income | Answer | |
| Earnings per share of Common Stock | Answer | |
In: Accounting
PA8-6 Preparing Operating Budgets for a Merchandising Firm [LO 8-5, 8-3a, f, g, h]
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:
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | ||||
| Budgeted Unit Sales | 39,000 | 59,000 | 29,500 | 59,000 | |||
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.
In: Accounting
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 15 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $910,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following: Chairs Desks Sales revenue $ 1,112,100 $ 2,570,400 Direct materials 603,000 990,000 Direct labor 170,000 480,000 Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? Chairs Desks b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $840,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.)
In: Accounting
Tulip Co acquired 80% of the share capital of Daffodil Co on 1 June 2015. The summarised draft statements of profit or loss for Tulip Co and Daffodil Co for the year ended 31 May 2016 are shown below:
| Tulip Co | Daffodil Co | |
| €'000 | €'000 | |
| Sales revenue | 8,400 | 3,200 |
| Cost of sales | (4,600) | (1,700) |
| Gross profit | 3,800 | 1,500 |
| Operating expenses | (2,200) | (960) |
| Profit before tax | 1,600 | 540 |
| Taxation | (600) | (140) |
| Profit for the year | 1,000 | 400 |
During the year Tulip Co sold goods costing €1,000,000 to Daffodil Co for €1,500,000. At 31 May 2016, 30% of these goods remained in Daffodil Co’s inventory.
Required:
Prepare the Tulip group consolidated statement of profit or loss for the year ended 31 May 2016 by writing the appropriate numbers in the blanks.
TULIP GROUP CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MAY 2016
| €'000 | |
| Sales revenue | |
| Cost of sales | |
| Gross profit | |
| Operating expenses | |
| Profit before tax | |
| Taxation | |
| Profit for the year | |
| Attributable to: | |
| Owners of the parent | |
| Non-controlling interest |
In: Accounting
Earnings per Share and Multiple-Step Income
Statement
The following summarized data relate to Bowden Corporation’s
current operations:
| Sales revenue | $745,000 | |
| Cost of goods sold | 450,000 | |
| Selling expenses | 58,000 | |
| Administrative expenses | 72,000 | |
| Loss on sale of equipment | 5,000 | |
| Income tax expense | 64,000 | |
| Shares of common stock | ||
| Outstanding at January 1 | 15,000 | shares |
| Additional issued at May 1 | 7,000 | shares |
| Additional issued at November 1 | 2,000 | shares |
Required
Prepare a multiple-step income statement for Bowden Corporation for
the year. Include earnings per share disclosure at the bottom of
the income statement.
Do not use negative signs with any of your answers below.
| BOWDEN CORPORATION Income Statement For the Year Ended December 31 |
||
|---|---|---|
| Sales Revenue | Answer | |
| Cost of Goods Sold | Answer | |
| Gross Profit on Sales | Answer | |
| Selling Expenses | Answer | |
| Administrative Expenses | Answer | Answer |
| Operating Income | Answer | |
| Loss on Sale of Equipment | Answer | |
| Income before Taxes | Answer | |
| Income Tax Expense | Answer | |
| Net Income | Answer | |
| Earnings per share of Common Stock | Answer | |
In: Accounting