You want to get a mortgage, but can only afford to pay $1200 per quarter. How much can you borrow, if the interest rate is 5% annually for a 30 year mortgage?
In: Finance
Estimated Income Statements, using Absorption and Variable Costing
Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:
| Sales (28,000 x $98) | $2,744,000 | ||
| Manufacturing costs (28,000 units): | |||
| Direct materials | 1,660,400 | ||
| Direct labor | 392,000 | ||
| Variable factory overhead | 184,800 | ||
| Fixed factory overhead | 218,400 | ||
| Fixed selling and administrative expenses | 59,400 | ||
| Variable selling and administrative expenses | 71,900 | ||
The company is evaluating a proposal to manufacture 31,200 units instead of 28,000 units, thus creating an ending inventory of 3,200 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.
a. 1. Prepare an estimated income statement, comparing operating results if 28,000 and 31,200 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 28,000 Units Manufactured | 31,200 Units Manufactured | |
| Sales | $ | $ |
| Cost of goods sold: | ||
| Cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total cost of goods sold | $ | $ |
| Gross profit | $ | $ |
| Selling and administrative expenses | ||
| Operating income | $ | $ |
Feedback
a. 2. Prepare an estimated income statement, comparing operating results if 28,000 and 31,200 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 28,000 Units Manufactured | 31,200 Units Manufactured | |
| Sales | $ | $ |
| Variable cost of goods sold: | ||
| Variable cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total variable cost of goods sold | $ | $ |
| Manufacturing margin | $ | $ |
| Variable selling and administrative expenses | ||
| Contribution margin | $ | $ |
| Fixed costs: | ||
| Fixed factory overhead | $ | $ |
| Fixed selling and administrative expenses | ||
| Total fixed costs | $ | $ |
| Operating income | $ | $ |
Income Statements under Absorption Costing and Variable Costing
Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (77,000 units) during the first month, creating an ending inventory of 7,000 units. During February, the company produced 70,000 units during the month but sold 77,000 units at $85 per unit. The February manufacturing costs and selling and administrative expenses were as follows:
| Number of Units | Unit Cost | Total Cost |
||||
| Manufacturing costs in February 1 beginning inventory: | ||||||
| Variable | 7,000 | $34.00 | $238,000 | |||
| Fixed | 7,000 | 13.00 | 91,000 | |||
| Total | $47.00 | $329,000 | ||||
| Manufacturing costs in February: | ||||||
| Variable | 70,000 | $34.00 | $2,380,000 | |||
| Fixed | 70,000 | 14.30 | 1,001,000 | |||
| Total | $48.30 | $3,381,000 | ||||
| Selling and administrative expenses in February: | ||||||
| Variable | 77,000 | $16.90 | $1,301,300 | |||
| Fixed | 77,000 | 7.00 | 539,000 | |||
| Total | $23.90 | $1,840,300 | ||||
a. Prepare an income statement according to the absorption costing concept for the month ending February 28.
| Fresno Industries Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ended February 28 | ||
| Sales | $ | |
| Cost of goods sold: | ||
| Beginning inventory | $ | |
| Cost of goods manufactured | ||
| Total cost of goods sold | ||
| Gross profit | $ | |
| Selling and administrative expenses | ||
| Operating income | $ | |
Feedback
a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead.
b. Prepare an income statement according to the variable costing concept for the month ending February 28.
| Fresno Industries Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ended February 28 | ||
| Sales | $ | |
| Variable cost of goods sold | ||
| Manufacturing margin | $ | |
| Variable selling and administrative expenses | ||
| Contribution margin | $ | |
| Fixed costs: | ||
| Fixed manufacturing costs | $ | |
| Fixed selling and administrative expenses | ||
| Total fixed costs | ||
| Operating income | $ | |
In: Accounting
I keep getting different answers for this question. Can you explain to me once you've finished part a and b how you figured out the accounts receivable? Do we do any repayment for the 3rd quarter and what is the interest? Some people have interest and some don't, what is it really?
Durianx Inc. distributes a electronic chessboards The following information was gathered to prepare the budget for the third quarter.
• Each unit of chessboard is budgeted to sell for an average price of $175. Unit sales are expected to be as follows:
|
June |
9,600 Units |
|
July |
9,700 Units |
|
August |
10,500 Units |
|
September |
11,900 Units |
|
October |
12,000 Units |
•Sales are made for cash and on credit. The following collection pattern is used to estimate monthly cash collections:
|
Cash sales |
30% |
|
Credit sales—month of sale |
40 |
|
Credit sales—month after sale |
26 |
|
Uncollectible |
4 |
|
Total |
100% |
•The company tries to maintain an inventory of 20% of the following month's sales. The company expects to have 1,940 Units on hand on June 30. Durianx pays an average of $125 per Units.
•The company pays for 60% of its purchases in the month of purchase and the remaining 40% in the month after purchase.
•The following monthly selling and administrative expenses are planned for the quarter.
|
July |
Aug |
Sept |
|
|
Depreciation |
$10,000 |
$20,000 |
$20,000 |
|
Rent |
30,000 |
30,000 |
30,000 |
|
Advertising |
50,000 |
50,000 |
50,000 |
|
Salaries |
350,000 |
350,000 |
370,000 |
|
Bad debts |
67,900 |
73,500 |
83,300 |
•On August 1st , the company plans to purchase $500,000 of new office equipment and a delivery truck. Additional depreciation is already accounted for in the above selling and administrative expenses.
• Durianx will collect the full $436,800 accounts receivable balance of June 30th in July. Durianx will pay the $481,000 of June Accounts Payable in July.
•Durianx wants to maintain a minimum cash balance of $40,000. An open line of credit at a local bank allows the company to borrow up to $500,000 per quarter in $1,000 increments.
•All borrowing is done at the beginning of the month, and all repayments are made at the end of a month in $1,000 increments. Accrued interest on the loan is paid only when principal is repaid. The interest rate is 12% per year. This means that if the loan is not reimbursed during the quarter then no interest expense is paid during that time.
•Durianx's tax rate is 30%.
•The June 30 balance sheet is budgeted as follows:
|
June 30 |
|
|
Cash |
$ 70,000 |
|
Accounts receivable |
436,800 |
|
Inventory |
242,500 |
|
Plant & equipment |
600,000 |
|
Accumulated depreciation |
(150,000) |
|
Total assets |
$ 1,199,300 |
|
Accounts payable |
$ 481,000 |
|
Common stock |
200,000 |
|
Retained earnings |
518,300 |
|
Total liabilities and equities |
$ 1,199,300 |
Required
Prepare a pro-forma income statement for the third quarter.
Prepare a pro-forma balance sheet as of September 30.
In: Accounting
After answering A and B, I still keep getting this question with mixed answers, some people have interest from borrowing for the quarter and some people don't. Can you help? Thanks
Durianx Inc. distributes a electronic chessboards The following information was gathered to prepare the budget for the third quarter.
• Each unit of chessboard is budgeted to sell for an average price of $175. Unit sales are expected to be as follows:
|
June |
9,600 Units |
|
July |
9,700 Units |
|
August |
10,500 Units |
|
September |
11,900 Units |
|
October |
12,000 Units |
•Sales are made for cash and on credit. The following collection pattern is used to estimate monthly cash collections:
|
Cash sales |
30% |
|
Credit sales—month of sale |
40% |
|
Credit sales—month after sale |
26% |
|
Uncollectible |
4% |
|
Total |
100% |
•The company tries to maintain an inventory of 20% of the following month's sales. The company expects to have 1,940 Units on hand on June 30. Durianx pays an average of $125 per Units.
•The company pays for 60% of its purchases in the month of purchase and the remaining 40% in the month after purchase.
•The following monthly selling and administrative expenses are planned for the quarter.
|
July |
Aug |
Sept |
|
|
Depreciation |
$10,000 |
$20,000 |
$20,000 |
|
Rent |
30,000 |
30,000 |
30,000 |
|
Advertising |
50,000 |
50,000 |
50,000 |
|
Salaries |
350,000 |
350,000 |
370,000 |
|
Bad debts |
67,900 |
73,500 |
83,300 |
•On August 1st , the company plans to purchase $500,000 of new office equipment and a delivery truck. Additional depreciation is already accounted for in the above selling and administrative expenses.
• Durianx will collect the full $436,800 accounts receivable balance of June 30th in July. Durianx will pay the $481,000 of June Accounts Payable in July.
•Durianx wants to maintain a minimum cash balance of $40,000. An open line of credit at a local bank allows the company to borrow up to $500,000 per quarter in $1,000 increments.
•All borrowing is done at the beginning of the month, and all repayments are made at the end of a month in $1,000 increments. Accrued interest on the loan is paid only when principal is repaid. The interest rate is 12% per year. This means that if the loan is not reimbursed during the quarter then no interest expense is paid during that time.
•Durianx's tax rate is 30%.
•The June 30 balance sheet is budgeted as follows:
|
June 30 |
|
|
Cash |
$ 70,000 |
|
Accounts receivable |
436,800 |
|
Inventory |
242,500 |
|
Plant & equipment |
600,000 |
|
Accumulated depreciation |
(150,000) |
|
Total assets |
$ 1,199,300 |
|
Accounts payable |
$ 481,000 |
|
Common stock |
200,000 |
|
Retained earnings |
518,300 |
|
Total liabilities and equities |
$ 1,199,300 |
Required (Please answer A AND B)
Prepare a pro-forma income statement for the third quarter.
Prepare a pro-forma balance sheet as of September 30.
In: Accounting
During the first month of operations ended May 31, Big Sky Creations Company produced 55,500 designer cowboy boots, of which 51,350 were sold. Operating data for the month are summarized as follows:
|
1 |
Sales |
$924,300.00 |
|
|
2 |
Manufacturing costs: |
||
|
3 |
Direct materials |
$416,250.00 |
|
|
4 |
Direct labor |
111,000.00 |
|
|
5 |
Variable manufacturing cost |
55,500.00 |
|
|
6 |
Fixed manufacturing cost |
55,500.00 |
638,250.00 |
|
7 |
Selling and administrative expenses: |
||
|
8 |
Variable |
$30,810.00 |
|
|
9 |
Fixed |
25,675.00 |
56,485.00 |
During June, Big Sky Creations produced 47,200 designer cowboy boots and sold 51,350 cowboy boots. Operating data for June are summarized as follows:
| Labels | |
| June 30 | |
| Cost of goods sold | |
| Fixed costs | |
| For the Month Ended June 30 | |
| For the Month Ended May 31 | |
| May 31 | |
| Variable cost of goods sold | |
| Amount Descriptions | |
| Contribution margin | |
| Contribution margin ratio | |
| Cost of goods manufactured | |
| Fixed manufacturing costs | |
| Fixed selling and administrative expenses | |
| Gross profit | |
| Operating income | |
| Inventory, June 1 | |
| Inventory, May 31 | |
| Operating loss | |
| Manufacturing margin | |
| Planned contribution margin | |
| Sales | |
| Sales mix | |
| Selling and administrative expenses | |
| Total cost of goods sold | |
| Total fixed costs | |
| Total variable cost of goods sold | |
| Variable cost of goods manufactured | |
| Variable selling and administrative expenses |
2a. Using the variable costing concept, prepare income statements for May. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative.
|
Big Sky Creations Company |
|
Variable Costing Income Statement |
|
1 |
|||
|
2 |
|||
|
3 |
|||
|
4 |
|||
|
5 |
|||
|
6 |
|||
|
7 |
|||
|
8 |
|||
|
9 |
|||
|
10 |
|||
|
11 |
|||
|
12 |
|||
|
13 |
In: Accounting
Estimated Income Statements, using Absorption and Variable Costing
Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:
| Sales (12,800 x $45) | $576,000 | ||
| Manufacturing costs (12,800 units): | |||
| Direct materials | 350,720 | ||
| Direct labor | 83,200 | ||
| Variable factory overhead | 38,400 | ||
| Fixed factory overhead | 46,080 | ||
| Fixed selling and administrative expenses | 12,500 | ||
| Variable selling and administrative expenses | 15,200 | ||
The company is evaluating a proposal to manufacture 14,400 units instead of 12,800 units, thus creating an ending inventory of 1,600 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.
a. 1. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 12,800 Units Manufactured | 14,400 Units Manufactured | |
| Sales | $ | $ |
| Cost of goods sold: | ||
| Cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total cost of goods sold | $ | $ |
| Gross profit | $ | $ |
| Selling and administrative expenses | ||
| Operating income | $ | $ |
Feedback
a. 2. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 12,800 Units Manufactured | 14,400 Units Manufactured | |
| Sales | $ | $ |
| Variable cost of goods sold: | ||
| Variable cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total variable cost of goods sold | $ | $ |
| Manufacturing margin | $ | $ |
| Variable selling and administrative expenses | ||
| Contribution margin | $ | $ |
| Fixed costs: | ||
| Fixed factory overhead | $ | $ |
| Fixed selling and administrative expenses | ||
| Total fixed costs | $ | $ |
| Operating income | $ | $ |
In: Accounting
Estimated Income Statements, using Absorption and Variable Costing
Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results:
| Sales (22,400 x $78) | $1,747,200 | ||
| Manufacturing costs (22,400 units): | |||
| Direct materials | 1,055,040 | ||
| Direct labor | 250,880 | ||
| Variable factory overhead | 116,480 | ||
| Fixed factory overhead | 138,880 | ||
| Fixed selling and administrative expenses | 37,800 | ||
| Variable selling and administrative expenses | 45,700 | ||
The company is evaluating a proposal to manufacture 24,800 units instead of 22,400 units, thus creating an ending inventory of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.
a. 1. Prepare an estimated income statement, comparing operating results if 22,400 and 24,800 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 22,400 Units Manufactured | 24,800 Units Manufactured | |
| Sales | $ | $ |
| Cost of goods sold: | ||
| Cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total cost of goods sold | $ | $ |
| Gross profit | $ | $ |
| Selling and administrative expenses | ||
| Operating income | $ | $ |
a. 2. Prepare an estimated income statement, comparing operating results if 22,400 and 24,800 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.
| Marshall Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 22,400 Units Manufactured | 24,800 Units Manufactured | |
| Sales | $ | $ |
| Variable cost of goods sold: | ||
| Variable cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| Total variable cost of goods sold | $ | $ |
| Manufacturing margin | $ | $ |
| Variable selling and administrative expenses | ||
| Contribution margin | $ | $ |
| Fixed costs: | ||
| Fixed factory overhead | $ | $ |
| Fixed selling and administrative expenses | ||
| Total fixed costs | $ | $ |
| Operating income | $ | $ |
In: Accounting
Estimated Income Statements, using Absorption and Variable Costing
Prior to the first month of operations ending April 30, 2016, Jadelis Industries Inc. estimated the following operating results:
| Sales (24,000 x $83) | $1,992,000 | ||
| Manufacturing costs (24,000 units): | |||
| Direct materials | 1,204,800 | ||
| Direct labor | 285,600 | ||
| Variable factory overhead | 132,000 | ||
| Fixed factory overhead | 158,400 | ||
| Fixed selling and administrative expenses | 43,100 | ||
| Variable selling and administrative expenses | 52,100 | ||
The company is evaluating a proposal to manufacture 26,400 units instead of 24,000 units, thus creating an ending inventory of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.
1. Prepare an estimated income statement, comparing operating results if 24,000 and 26,400 units are manufactured in the absorption costing format.
| Jadelis Industries Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ending April 30, 2016 | ||
| 24,000 Units Manufactured | 26,400 Units Manufactured | |
| Sales | $ | $ |
| Cost of goods sold: | ||
| Cost of goods manufactured | $ | $ |
| Less inventory, April 30 | f | |
| Cost of goods sold | $ | $ |
| Gross profit | $ | $ |
| Selling and administrative expenses | ||
| Income from operations | $ | $ |
a. 2. Prepare an estimated income statement, comparing operating results if 24,000 and 26,400 units are manufactured in the variable costing format.
| Jadelis Industries Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ending April 30, 2016 | ||
| 24,000 Units Manufactured | 26,400 Units Manufactured | |
| Sales | $ | $ |
| Variable cost of goods sold: | ||
| Variable cost of goods manufactured | $ | $ |
| Less inventory, April 30 | ||
| Variable cost of goods sold | $ | $ |
| Manufacturing margin | $ | $ |
| Variable selling and administrative expenses | ||
| Contribution margin | $ | $ |
| Fixed costs: | ||
| Fixed factory overhead | $ | $ |
| Fixed selling and administrative expenses | ||
| Total fixed costs | $ | $ |
| Income from operations | $ | $ |
In: Accounting
Income Statements under Absorption Costing and Variable Costing
Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (59,400 units) during the first month, creating an ending inventory of 5,400 units. During June, the company produced 54,000 garments during the month but sold 59,400 units at $100 per unit. The June manufacturing costs and selling and administrative expenses were as follows:
| Number of Units | Unit Cost | Total Cost |
||||
| Manufacturing costs in June 1 beginning inventory: | ||||||
| Variable | 5,400 | $40.00 | $216,000 | |||
| Fixed | 5,400 | 15.00 | 81,000 | |||
| Total | $55.00 | $297,000 | ||||
| Manufacturing costs in June: | ||||||
| Variable | 54,000 | $40.00 | $2,160,000 | |||
| Fixed | 54,000 | 16.50 | 891,000 | |||
| Total | $56.50 | $3,051,000 | ||||
| Selling and administrative expenses in June: | ||||||
| Variable | 59,400 | 19.50 | $1,158,300 | |||
| Fixed | 59,400 | 7.00 | 415,800 | |||
| Total | 26.50 | $1,574,100 | ||||
a. Prepare an income statement according to the absorption costing concept for June.
| Joplin Industries Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ended June 30 | ||
| Sales | $ | |
| Cost of goods sold: | ||
| Beginning inventory | $ | |
| Cost of goods manufactured | ||
| Total cost of goods sold | ||
| Gross profit | $ | |
| Selling and administrative expenses | ||
| Income from operations | $ | |
Feedback
a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead.
Learning Objective 1.
b. Prepare an income statement according to the variable costing concept for June.
| Joplin Industries Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ended June 30 | ||
| Sales | $ | |
| Variable cost of goods sold | ||
| Manufacturing margin | $ | |
| Variable selling and administrative expenses | ||
| Contribution margin | $ | |
| Fixed costs: | ||
| Fixed manufacturing costs | $ | |
| Fixed selling and administrative expenses | ||
| Total fixed costs | ||
| Income from operations | $ | |
In: Accounting
Of all the times this hard drive could crash, it had to be now,
” Marcy cried. “How can I finish the June financial reports without
all the information? I knew I should have backed up the disk last
night before I left work.” News of the disaster traveled quickly
through the office, and people began to stop by her cubicle to
offer their help.
John was the first to the rescue. “It
might not be as bad as you think, Marcy. I have the financial
reports from May right here. According to the balance sheet, we had
a total inventory of $99,000 at the end of May. And I remember that
the Finished Goods Inventory was one-third of that amount.”
“I just finished the inventory counts
last night,” Peter chimed in from across the hall. “According to my
tally sheets, we finished June with $80,000 in Direct Materials
Inventory, $52,000 in Work in Process Inventory, and $25,000 in
Finished Goods Inventory. This was a 100% increase from the
balances in Direct Materials Inventory and Work in Process
Inventory at the end of May. I bet with a little more investigative
work, we can get all the numbers you need to complete the
reports.”
Sally called from Payroll to tell
Marcy that the company had paid a total of $36,000 for direct labor
during June. Juan, the billing supervisor, e-mailed Marcy that the
company had sent out invoices to customers totaling $291,000.
Marcy knew that the overhead rate was
200% of direct labor costs. She also knew that the company priced
its product using a 50% markup on the cost of goods sold. Armed
with all this information, she sat down to reconstruct the
inventory accounts for June.
1. Begininng finished goods:
2. Beginning direct materials:
3. Beginning work in process:
4. Cost of goods sold:
5. Cost of goods manufactured
6. Direct material used:
7. Purchases:
8. Direct labor:
9. overhead:
In: Accounting