1. How has usage of internet advertising changed over the years? In light of this trend, how is spending on internet advertising expected to change in the future? Support your answer with external research in EBSCO. Please do not use the general Internet for your research.
In: Operations Management
|
Operating Income – January |
|||
|
Production Level |
Production Level |
Production Level |
|
|
100,000 |
90,000 |
80,000 |
|
|
Absorption |
$_______________ |
$_______________ |
$_______________ |
|
Variable |
$_______________ |
$_______________ |
$_______________ |
Does the level of production affect income under either costing method? Explain your findings.
| Data Section | ||
| Actual production in units | 100,000 | |
| Sales in units | 80,000 | |
| Sales price per unit | $30 | |
| Variable manufacturing costs per unit | $14 | |
| Variable selling costs per unit | $2 | |
| Fixed manufacturing costs | $315,000 | |
| Fixed selling expenses | $100,000 | |
| Answer Section | ||
| Income statement: Absorption costing | ||
| Sales | $2,400,000 | |
| Cost of goods sold: | ||
| Variable manufacturing costs | $1,400,000 | |
| Fixed manufacturing costs | 315,000 | |
| Total goods available for sale | $1,715,000 | |
| Less ending inventory | 343,000 | |
| Cost of goods sold | 1,372,000 | |
| Gross profit | $1,028,000 | |
| Selling expenses: | ||
| Fixed selling expenses | $160,000 | |
| Variable selling expenses | 100,000 | |
| Total selling expenses | 260,000 | |
| Operating income | $768,000 | |
| Income statement: Variable costing | ||
| Sales | $2,400,000 | |
| Cost of goods sold: | ||
| Variable manufacturing costs | $1,400,000 | |
| Less ending inventory | 280,000 | |
| Variable cost of goods sold | 1,120,000 | |
| Manufacturing margin | $1,280,000 | |
| Variable selling expenses | FORMULA9 | |
| Contribution margin | $1,280,000 | |
| Fixed costs: | ||
| Fixed manufacturing costs | FORMULA10 | |
| Fixed selling expenses | 100,000 | |
| Total fixed costs | 100,000 | |
| Operating income | $1,180,000 | |
In: Accounting
Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results:
| Sales (20,000 x $71) | $1,420,000 | ||
| Manufacturing costs (20,000 units): | |||
| Direct materials | 852,000 | ||
| Direct labor | 202,000 | ||
| Variable factory overhead | 94,000 | ||
| Fixed factory overhead | 112,000 | ||
| Fixed selling and administrative expenses | 30,500 | ||
| Variable selling and administrative expenses | 36,800 | ||
The company is evaluating a proposal to manufacture 22,400 units instead of 20,000 units, thus creating an Inventory, October 31 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 20,000 and 22,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank or enter “0”.
| Marshall Inc. | ||
| Absorption Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 20,000 Units Manufactured | 22,400 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 | ||
| Income from operations | $ | $ |
Feedback
a. 2. Prepare an estimated income statement, comparing operating results if 20,000 and 22,400 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank or enter “0”.
| Marshall Inc. | ||
| Variable Costing Income Statement | ||
| For the Month Ending October 31 | ||
| 20,000 Units Manufactured | 22,400 Units Manufactured | |
| Sales | $ | $ |
| Variable cost of goods sold: | ||
| Variable cost of goods manufactured | $ | $ |
| Inventory, October 31 | ||
| $ | $ | |
| $ | $ | |
| $ | $ | |
| Fixed costs: | ||
| $ | $ | |
| Total fixed costs | $ | $ |
| $ | $ | |
In: Accounting
Athletic World began October with merchandise inventory of 95 crates of vitamins that cost a total of $3,800. During the month, Athletic World purchased and sold merchandise on account as follows:
|
Oct. 5 |
Purchase |
155 |
crates @ |
$71 |
each |
|
13 |
Sale |
180 |
crates @ |
$102 |
each |
|
18 |
Purchase |
193 |
crates @ |
$75 |
each |
|
26 |
Sale |
200 |
crates @ |
$118 |
each |
Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.)
Requirement 1. Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
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2. |
Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit. |
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3. |
Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.) |
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4. |
If the business wanted to pay the least amount of income taxes possible, which method would it choose? |
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Purchases |
Cost of Goods Sold |
Inventory on Hand |
|||||||
|
Unit |
Total |
Unit |
Total |
Unit |
Total |
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Date |
Quantity |
Cost |
Cost |
Quantity |
Cost |
Cost |
Quantity |
Cost |
Cost |
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Oct. 1 |
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5 |
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13 |
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18 |
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26 |
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Totals |
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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 (55,000 units) during the first month, creating an ending inventory of 5,000 units. During June, the company produced 50,000 garments during the month but sold 55,000 units at $90 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 | 5,000 | $36.00 | $180,000 | |||
| Fixed | 5,000 | 14.00 | 70,000 | |||
| Total | $50.00 | $250,000 | ||||
| Manufacturing costs in June: | ||||||
| Variable | 50,000 | $36.00 | $1,800,000 | |||
| Fixed | 50,000 | 15.40 | 770,000 | |||
| Total | $51.40 | $2,570,000 | ||||
| Selling and administrative expenses in June: | ||||||
| Variable | 55,000 | 18.20 | $1,001,000 | |||
| Fixed | 55,000 | 7.00 | 385,000 | |||
| Total | 25.20 | $1,386,000 | ||||
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 | ||
| $ | ||
| $ | ||
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 | ||
| $ | ||
| $ | ||
| $ | ||
| Fixed costs: | ||
| $ | ||
| $ | ||
c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)?
Under the method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the income statement will have a lower 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 (61,600 units) during the first month, creating an ending inventory of 5,600 units. During June, the company produced 56,000 garments during the month but sold 61,600 units at $90 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 | 5,600 | $36.00 | $201,600 | |||
| Fixed | 5,600 | 14.00 | 78,400 | |||
| Total | $50.00 | $280,000 | ||||
| Manufacturing costs in June: | ||||||
| Variable | 56,000 | $36.00 | $2,016,000 | |||
| Fixed | 56,000 | 15.40 | 862,400 | |||
| Total | $51.40 | $2,878,400 | ||||
| Selling and administrative expenses in June: | ||||||
| Variable | 61,600 | 18.20 | $1,121,120 | |||
| Fixed | 61,600 | 7.00 | 431,200 | |||
| Total | 25.20 | $1,552,320 | ||||
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 | $ | |
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
24.Following the principles and enablers of COBIT will enable organizations to better:
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a.ensure that they address all categories of Brown's risk taxonomy. |
|
|
b.address all elements of the C-I-A triad. |
|
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c.apply the systems development life cycle. |
|
25.WebTrust and SysTrust can be incorporated into an organization's:
|
a.Internal control plan |
|
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b.Neither internal control plan nor enterprise risk management plan |
|
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c.Enterprise risk management plan |
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d.Both internal control plan and enterprise risk management plan |
13.As the first step in the acquisition/payment process, goods
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a.The relationship between a buyer and a seller. |
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b.The amount of cash in the bank. |
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c.The use of information technology. |
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d.Monitored need. |
25.SCP Corporation purchased inventory on account from OBP Corporation. Which of the following happens immediately after the first step in SCP's acquisition/payment process?
|
a.The second step in OBP's sales/collection process |
|
|
b.The second step in SCP's acquisition/payment process |
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c.An internal audit of the transaction by OBP |
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|
d.The first step in OBP's sales/collection process |
In: Accounting
Entries and Schedules for Unfinished Jobs and Completed Jobs
Hildreth Company uses a job order cost system. The following data summarize the operations related to production for April, the first month of operations:
Materials purchased on account, $2,700
Materials requisitioned and factory labor used:
Job No.MaterialsFactory Labor
101$2,660 $1,870
1023,250 2520
1032,150 1,230
1047,290 4,640
1054,630 3,530
1063,380 2,240
For general factory use900 2,770
Factory overhead costs incurred on account, $5,080.
Depreciation of machinery and equipment, $1,330.
The factory overhead rate is $70 per machine hour. Machine hours
used:
Job No.Machine Hours
101 17
102 39
103 33
104 82
105 27
106 32
Total 230
Jobs completed: 101, 102, 103, and 105.
Jobs were shipped and customers were billed as follows: Job 101, $8,390; Job 102, $12,110; Job 105, $16,500.
Required:
1. Journalize the entries to record the summarized operations. If an amount box does not require an entry, leave it blank.
EntriesDescriptionDebitCredit
a.Materials
Accounts Payable
b.Work in Process
Factory Overhead
Materials
Wages Payable
c.Factory Overhead
Accounts Payable
d.Factory Overhead
Accumulated Depreciation-Machinery and Equipment
e.Work in Process
Factory Overhead
f.Finished Goods
Work in Process
g. SaleAccounts Receivable
Sales
g. CostCost of Goods Sold
Finished Goods
2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.
Work in Process
(b) (f)
(e)
Bal.
Finished Goods
(f) (g)
Bal.
3. Prepare a schedule of unfinished jobs to support the balance in the work in process account.
Hildreth Company
Schedule of Unfinished Jobs
JobDirect MaterialsDirect LaborFactory OverheadTotal
No. 104 $$$$
No. 106
Balance of Work in Process, April 30$
4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.
Hildreth Company
Schedule of Completed Jobs
JobDirect MaterialsDirect LaborFactory OverheadTotal
Finished Goods, April 30 (Job 103) $$$$
In: Accounting
Entries and Schedules for Unfinished Jobs and Completed Jobs
Hildreth Company uses a job order cost system. The following data summarize the operations related to production for April, the first month of operations:
Materials purchased on account, $2,700
Materials requisitioned and factory labor used:
Job No.MaterialsFactory Labor
101$2,660 $1,870
1023,250 2520
1032,150 1,230
1047,290 4,640
1054,630 3,530
1063,380 2,240
For general factory use900 2,770
Factory overhead costs incurred on account, $5,080.
Depreciation of machinery and equipment, $1,330.
The factory overhead rate is $70 per machine hour. Machine hours used:
Job No.Machine Hours
101 17
102 39
103 33
104 82
105 27
106 32
Total 230
Jobs completed: 101, 102, 103, and 105.
Jobs were shipped and customers were billed as follows: Job 101, $8,390; Job 102, $12,110; Job 105, $16,500.
Required:
1. Journalize the entries to record the summarized operations. If an amount box does not require an entry, leave it blank.
EntriesDescriptionDebitCredit
a.Materials
Accounts Payable
b.Work in Process
Factory Overhead
Materials
Wages Payable
c.Factory Overhead
Accounts Payable
d.Factory Overhead
Accumulated Depreciation-Machinery and Equipment
e.Work in Process
Factory Overhead
f.Finished Goods
Work in Process
g. SaleAccounts Receivable
Sales
g. CostCost of Goods Sold
Finished Goods
2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.
Work in Process
(b) (f)
(e)
Bal.
Finished Goods
(f) (g)
Bal.
3. Prepare a schedule of unfinished jobs to support the balance in the work in process account.
Hildreth Company
Schedule of Unfinished Jobs
JobDirect MaterialsDirect LaborFactory OverheadTotal
No. 104 $$$$
No. 106
Balance of Work in Process, April 30$
4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.
Hildreth Company
Schedule of Completed Jobs
JobDirect MaterialsDirect LaborFactory OverheadTotal
Finished Goods, April 30 (Job 103) $$$$
In: Accounting
Entries and Schedules for Unfinished Jobs and Completed Jobs
Hildreth Company uses a job order cost system. The following data summarize the operations related to production for April, the first month of operations:
Materials purchased on account, $2,920.
Materials requisitioned and factory labor used:
Job No.MaterialsFactory Labor
101$2,850 $2,940
1023,480 3,970
1032,310 1,940
1047,810 7,290
1054,960 5,560
1063,620 3,530
For general factory use970 4,350
Factory overhead costs incurred on account, $5,440.
Depreciation of machinery and equipment, $2,090.
The factory overhead rate is $60 per machine hour. Machine hours
used:
Job No.Machine Hours
101 20
102 44
103 35
104 78
105 23
106 38
Total 238
Jobs completed: 101, 102, 103, and 105.
Jobs were shipped and customers were billed as follows: Job 101, $8,390; Job 102, $12,110; Job 105, $18,420.
Required:
1. Journalize the entries to record the summarized operations. If an amount box does not require an entry, leave it blank.
EntriesDescriptionDebitCredit
a.Materials
Accounts Payable
b.Work in Process
Factory Overhead
Materials
Wages Payable
c.Factory Overhead
Accounts Payable
d.Factory Overhead
Accumulated Depreciation-Machinery and Equipment
e.Work in Process
Factory Overhead
f.Finished Goods
Work in Process
g. SaleAccounts Receivable
Sales
g. CostCost of Goods Sold
Finished Goods
2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.
Work in Process
(b) (f)
(e)
Bal.
Finished Goods
(f) (g)
Bal.
3. Prepare a schedule of unfinished jobs to support the balance in the work in process account.
Hildreth Company
Schedule of Unfinished Jobs
JobDirect MaterialsDirect LaborFactory OverheadTotal
No. 104 $$$$
No. 106
Balance of Work in Process, April 30$
4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.
Hildreth Company
Schedule of Completed Jobs
JobDirect MaterialsDirect LaborFactory OverheadTotal
Finished Goods, April 30 (Job 103) $$$$
In: Accounting