Manufacturing Income Statement, Statement of Cost of Goods Manufactured
Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.
| On Company |
Off Company |
|||
| Materials inventory, December 1 | $66,090 | $83,930 | ||
| Materials inventory, December 31 | (a) | 94,840 | ||
| Materials purchased | 167,870 | (a) | ||
| Cost of direct materials used in production | 177,120 | (b) | ||
| Direct labor | 249,160 | 188,840 | ||
| Factory overhead | 77,330 | 94,000 | ||
| Total manufacturing costs incurred in December | (b) | 543,030 | ||
| Total manufacturing costs | 630,500 | 745,300 | ||
| Work in process inventory, December 1 | 126,890 | 202,270 | ||
| Work in process inventory, December 31 | 107,070 | (c) | ||
| Cost of goods manufactured | (c) | 537,990 | ||
| Finished goods inventory, December 1 | 111,690 | 94,000 | ||
| Finished goods inventory, December 31 | 116,980 | (d) | ||
| Sales | 974,170 | 839,300 | ||
| Cost of goods sold | (d) | 543,030 | ||
| Gross profit | (e) | (e) | ||
| Operating expenses | 126,890 | (f) | ||
| Net income | (f) | 186,320 | ||
Required:
1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.
| Letter | On Company | Off Company |
| a. | $ | $ |
| b. | $ | $ |
| c. | $ | $ |
| d. | $ | $ |
| e. | $ | $ |
| f. | $ | $ |
2. Prepare On Company's statement of cost of goods manufactured for December.
| On Company | |||
| Statement of Cost of Goods Manufactured | |||
| For the Month Ended December 31 | |||
| Work in process inventory, December 1 | $ | ||
| Direct materials: | |||
| Materials inventory, December 1 | $ | ||
| Purchases | |||
| Cost of materials available for use | $ | ||
| Less materials inventory, December 31 | |||
| Cost of direct materials used in production | $ | ||
| Direct labor | |||
| Factory overhead | |||
| Total manufacturing costs incurred during December | |||
| Total manufacturing costs | $ | ||
| Less materials inventory, December 31 | |||
| Cost of goods manufactured | $ | ||
3. Prepare On Company's income statement for December.
| On Company | ||
| Income Statement | ||
| For the Month Ended December 31 | ||
| Sales | $ | |
| Cost of goods sold: | ||
| Finished goods inventory, December 1 | $ | |
| Cost of goods manufactured | ||
| Cost of finished goods available for sale | $ | |
| Less finished goods inventory, December 31 | ||
| Cost of goods sold | ||
| Gross profit | $ | |
| Operating expenses | ||
| Net income | $ | |
In: Accounting
|
Carpenter Cornices, Ltd., produces a wide variety of cornice moldings for windows at a plant located in Evergreen Park, Illinois. Because there are hundreds of products, some of which are made only to order, the company uses a job-order costing system. On July 1, the start of the company’s fiscal year, inventory account balances were as follows: |
|
Raw materials |
$ | 12,800 |
|
Work in process |
$ | 6,800 |
| Finished goods |
$ |
10,500 |
|
The company applies overhead cost to jobs on the basis of machine-hours. Its predetermined overhead rate for the fiscal year starting July 1 was based on a cost formula that estimated $200,600 of manufacturing overhead for an estimated activity level of 59,000 machine-hours. During the year, the following transactions were completed (Assume all purchases and services were acquired on account): |
| a. | Raw materials purchased on account, $204,000. |
| b. |
Raw materials requisitioned for use in production, $165,000 (materials costing $154,000 were chargeable directly to jobs; the remaining materials were indirect). |
| c. | Costs for employee services were incurred as follows: |
| Direct labor | $ | 112,000 |
| Indirect labor | $ | 48,800 |
| Sales commissions | $ | 35,000 |
| Administrative salaries | $ | 54,000 |
| d. |
Prepaid insurance expired during the year, $28,500 ($17,900 of this amount related to factory operations, and the remainder related to selling and administrative activities). |
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| e. | Utility costs incurred in the factory, $26,000. | |||||||||||||||||||||||||
| f. | Advertising costs incurred, $15,000. | |||||||||||||||||||||||||
| g. |
Depreciation recorded on equipment, $40,000. ($26,000 of this amount was on equipment used in factory operations; the remaining $14,000 was on equipment used in selling and administrative activities.) |
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| h. |
Manufacturing overhead cost was applied to jobs, $?. (The company recorded 30,000 machine-hours of operating time during the year.) |
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| i. | Goods that had cost $328,000 to manufacture according to their job cost sheets were completed. | |||||||||||||||||||||||||
| j. |
Sales (all on account) to customers during the year totaled $619,000. These goods had cost $327,000 to manufacture according to their job cost sheets.
|
3-bPrepare a journal entry to close any balance in the
Manufacturing Overhead account to Cost of Goods Sold.
Record the entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.\
4-
|
Prepare an income statement for the year. (Round your intermediate calculations to 2 decimal places.) |
In: Accounting
Real Estate Development
A real estate developer plans to build an apartment building near a major university aimed at generating rental income from graduate students. Four types of apartment are being considered in the planning process: studio apartments and 1, 2 or 3-bedroom units. It is assumed that studio apartments will be 500 sq. ft., 1-bedroom units will be 700 sq. ft., 2-bedroom units will be 800 sq. ft. and 3-bedroom units will be 1,000 sq. ft.
The develop does not believe that the building should have more than 15 1-bedroom units, 20 2-bedroom unit and 5 3-bedroom units. Current zoning restrictions limit the building to 40,000 sq. ft. in total and no more than 45 residential units. A local temporary housing agency has invested in the project, on the condition that it can lease five 1-bedroom units and eight 2-bedroom units for its own clients.
Estimated market rents for apartments are: studio - $350/mo., 1-bedroom - $450/mo., 2-bedroom - $550/mo. and 3-bedroom - $750/mo.
Create a linear spreadsheet model to advise the developer on the optimal design.
What constraints are binding?
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Problem 9-19
Corporate valuation
Barrett Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Barrett does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Barrett's stock. The pension fund manager has estimated Barrett's free cash flows for the next 4 years as follows: $2 million, $6 million, $11 million, and $13 million. After the fourth year, free cash flow is projected to grow at a constant 8%. Barrett's WACC is 16%, the market value of its debt and preferred stock totals $52 million, and it has 16 million shares of common stock outstanding.
a. What is the present value of the free cash flows projected during the next 4 years? Round your answer to the nearest cent.
b. What is the firm's horizon, or continuing, value? Round your answer to the nearest cent.
c. What is the firm's total value today? Round your answer to the nearest cent.
d. What is an estimate of Barrett's price per share? Round your answer to the nearest cent.
In: Finance
In: Physics
Meyer Inc’s total invested capital is $676,000, and its total debt outstanding is $185,000. The new CFO wants to establish a total debt to total capital ratio of 25%. The size of the firm will not change.
How much debt must the company add or subtract to achieve the target debt to capital ratio?
In: Finance
Edelman Engines has $18 billion in total assets — of which cash and equivalents total $100 million. Its balance sheet shows $2.7 billion in current liabilities — of which the notes payable balance totals $0.82 billion. The firm also has $8.1 billion in long-term debt and $7.2 billion in common equity. It has 600 million shares of common stock outstanding, and its stock price is $22 per share. The firm's EBITDA totals $1.848 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places.
M/B: ______ ×
EV/EBITDA: ___________
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Gutweed, Inc. has total equity of $133,000 and total assets of $225,000. What is the debt-equity ratio?
0.97 | ||
0.82 | ||
0.69 | ||
0.76 |
Fennel, Inc. has inventory of $2,200, current liabilities of $3,100, cash of $1,900, and accounts receivable of $3,900. What is the cash ratio?
0.45 | ||
0.61 | ||
0.72 | ||
0.53 |
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Edelman Engines has $17 billion in total assets — of which cash and equivalents total $110 million. Its balance sheet shows $2.55 billion in current liabilities — of which the notes payable balance totals $1.12 billion. The firm also has $9.35 billion in long-term debt and $5.1 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $25 per share. The firm's EBITDA totals $0.9 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places.
In: Finance
Edelman Engines has $18 billion in total assets — of which cash and equivalents total $90 million. Its balance sheet shows $2.7 billion in current liabilities — of which the notes payable balance totals $0.99 billion. The firm also has $8.1 billion in long-term debt and $7.2 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $31 per share. The firm's EBITDA totals $1.395 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places.
M/B: ×
EV/EBITDA:
In: Finance