Problem 7-11
Balance Sheet Analysis
Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data:
Total assets turnover: 1.3
Gross profit margin on sales: (Sales - Cost of goods sold)/Sales =
20%
Total liabilities-to-assets ratio: 45%
Quick ratio: 1.05
Days sales outstanding (based on 365-day year): 39.5 days
Inventory turnover ratio: 7.0
Round your answers to the nearest whole dollar.
| Partial Income | Statement Information |
| Sales | $ _____ |
| Cost of goods sold | $ ______ |
Balance Sheet
| Cash | $ _______ | Accounts payable | $ ______ |
| Accounts receivable | $ ______ | Long-term debt | $ 50,000 |
| Inventories | $ _______ | Common stock | $ ______ |
| Fixed assets | $ _____ | Retained earnings | $ 100,000 |
| Total assets | $ 400,000 | Total liabilities and equity | $ _______ |
Answer all the blanks ____ and plz show steps
In: Finance
Mastery Problem: Cost-Volume-Profit Analysis
Cost Behavior
Cover-to-Cover Company is a manufacturer of shelving for books. The company has compiled the following cost data, and wants your help in determining the cost behavior. After reviewing the data, complete requirements (1) and (2) that follow.
Units Produced |
Total Lumber Cost |
Total Utilities Cost |
Total Machine Depreciation Cost |
| 6,000 shelves | $60,000 | $8,400 | $120,000 |
| 12,000 shelves | 120,000 | 15,300 | 120,000 |
| 24,000 shelves | 240,000 | 29,100 | 120,000 |
| 30,000 shelves | 300,000 | 36,000 | 120,000 |
1. Determine whether the costs in the table are variable, fixed, mixed, or none of these.
| Lumber | |
| Utilities | |
| Depreciation |
2. For each cost, determine the fixed portion of the cost, and the per-unit variable cost. If there is no amount or an amount is zero, enter "0". Recall that, for N = Number of Units Produced, Total Costs = (Variable Cost Per Unit x N) + Fixed Cost. Complete the following table with your answers. Round variable portion of cost (per unit) answers to two decimal places.
Cost |
Fixed Portion of Cost |
Variable Portion of Cost (per Unit) |
| Lumber | $fill in the blank 15175ef54018fb7_4 | $fill in the blank 15175ef54018fb7_5 |
| Utilities | fill in the blank 15175ef54018fb7_6 | fill in the blank 15175ef54018fb7_7 |
| Depreciation | fill in the blank 15175ef54018fb7_8 | fill in the blank 15175ef54018fb7_9 |
High-Low
Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow.
| Units Produced | Total Cost | ||
| January | 4,360 | units | $65,600 |
| February | 300 | 6,250 | |
| March | 1,000 | 15,000 | |
| April | 4,800 | 73,750 | |
| May | 1,750 | 32,500 | |
| June | 3,015 | 48,000 | |
1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Total Costs = (Variable Cost Per Unit x Number of Units Produced) + Fixed Cost. Complete the following table.
| Total Fixed Cost | Variable Cost per Unit |
| $fill in the blank e98f55030075055_1 | $fill in the blank e98f55030075055_2 |
2. With your Total Fixed Cost and Variable Cost per Unit from the high-low method, compute the total cost for the following values of N (Number of Units Produced).
| Number of Units Produced |
Total Cost |
| 3,500 | $fill in the blank e98f55030075055_3 |
| 4,360 | fill in the blank e98f55030075055_4 |
| 4,800 | fill in the blank e98f55030075055_5 |
3. Why does the total cost computed for 4,360 units not match the data for January?
a. The high-low method is accurate only for months in which production is at full capacity.
b. The high-low method only gives accurate data when fixed costs are zero.
c. The high-low method gives a formula for the estimated total cost and may not match levels of production other than the highest and lowest.
d. The high-low method gives accurate data only for levels of production outside the relevant range.
Contribution Margin
Review the contribution margin income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statements. Complete the following table from the data provided on the income statements. Each company sold 77,800 units during the year.
| Cover-to-Cover Company |
Biblio Files Company |
|
| Contribution margin ratio (percent) | fill in the blank 545944fd9fe8f91_1% | fill in the blank 545944fd9fe8f91_2% |
| Unit contribution margin | $fill in the blank 545944fd9fe8f91_3 | $fill in the blank 545944fd9fe8f91_4 |
| Break-even sales (units) | fill in the blank 545944fd9fe8f91_5 | fill in the blank 545944fd9fe8f91_6 |
| Break-even sales (dollars) | $fill in the blank 545944fd9fe8f91_7 | $fill in the blank 545944fd9fe8f91_8 |
Income Statement - Cover-to-Cover
| Cover-to-Cover Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 |
||
| Sales | $389,000 | |
| Variable costs: | ||
| Manufacturing expense | $233,400 | |
| Selling expense | 19,450 | |
| Administrative expense | 58,350 | (311,200) |
| Contribution margin | $77,800 | |
| Fixed costs: | ||
| Manufacturing expense | $5,000 | |
| Selling expense | 4,000 | |
| Administrative expense | 10,450 | (19,450) |
| Operating income | $58,350 | |
Income Statement - Biblio Files
| Biblio Files Company Contribution Margin Income Statement For the Year Ended December 31, 20Y8 |
||
| Sales | $389,000 | |
| Variable costs: | ||
| Manufacturing expense | $155,600 | |
| Selling expense | 15,560 | |
| Administrative expense | 62,240 | (233,400) |
| Contribution margin | $155,600 | |
| Fixed costs: | ||
| Manufacturing expense | $79,250 | |
| Selling expense | 8,000 | |
| Administrative expense | 10,000 | (97,250) |
| Operating income | $58,350 | |
Sales Mix
Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings.
| Type of Bookshelf |
Sales Price per Unit |
Variable Cost per Unit |
| Basic | $5.00 | $1.75 |
| Deluxe | 9.00 | 8.10 |
The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called “Combined,” the unit contribution margin for the Combined product would be $2.31. Fixed costs for the upcoming year are estimated at $346,500. Recall that the totals of all the sales mix percents must be 100%. Determine the amounts to complete the following table.
| Type of Bookshelf | Percent of Sales Mix | Break-Even Sales in Units | Break-Even Sales in Dollars |
| Basic | fill in the blank 954ba6f59fe7052_1% | fill in the blank 954ba6f59fe7052_2 | $fill in the blank 954ba6f59fe7052_3 |
| Deluxe | fill in the blank 954ba6f59fe7052_4% | fill in the blank 954ba6f59fe7052_5 | $fill in the blank 954ba6f59fe7052_6 |
Target Profit
Refer again to the income statements for Cover-to-Cover Company and Biblio Files Company on their respective Income Statement. Note that both companies have the same sales and net income. Answer questions (1) - (3) that follow, assuming that all data for the coming year is the same as the current year, except for the amount of sales.
1. If Cover-to-Cover Company wants to increase
its profit by $30,000 in the coming year, what must their amount of
sales be?
$fill in the blank e41fe3015f9006a_1
2. If Biblio Files Company wants to increase
its profit by $30,000 in the coming year, what must their amount of
sales be?
$fill in the blank e41fe3015f9006a_2
3. What would explain the difference between your answers for (1) and (2)?
a. Biblio Files Company has a higher contribution margin ratio, and so more of each sales dollar is available to cover fixed costs and provide operating income.
b. Cover-to-Cover Company’s contribution margin ratio is lower, meaning that it’s more efficient in its operations.
c. The companies have goals that are not in the relevant range.
d. The answers are not different; each company has the same required sales amount for the coming year to achieve the desired target profit.
In: Accounting
Suppose that the inverse demand equation for a firm's product is P = 420?10Q. (11.2) The total cost is given by the equation TC = 500+20Q^2. (11.3) a. What are the profit-maximizing price and quantity from a single-price strategy? b. Given your answer to part a, what is the firm's total operating profit? What is the firms total operating profit if it engages in perfect first-degree price discrimination? What is the firm's total economic profit?
In: Economics
Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments--Molding and Fabrication. It started, completed, and sold only two jobs during March—Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):
| Molding | Fabrication | Total | |||||||
| Estimated total machine-hours used | 2,500 | 1,500 | 4,000 | ||||||
| Estimated total fixed manufacturing overhead | $ | 12,000 | $ | 16,200 | $ | 28,200 | |||
| Estimated variable manufacturing overhead per machine-hour | $ | 2.20 | $ | 3.00 | |||||
| Job P | Job Q | |||||
| Direct materials | $ | 21,000 | $ | 12,000 | ||
| Direct labor cost | $ | 27,400 | $ | 10,700 | ||
| Actual machine-hours used: | ||||||
| Molding | 2,500 | 1,600 | ||||
| Fabrication | 1,400 | 1,700 | ||||
| Total | 3,900 | 3,300 | ||||
Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.
Required:
For questions 1-8, assume that Sweeten Company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. For questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments.
1. How much manufacturing overhead was applied to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)
1b. What was the total manufacturing cost assigned to Job P? (Do not round intermediate calculations.)
2. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
3. What was the total manufacturing cost assigned to Job Q? (Do not round intermediate calculations.)
3b. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
In: Accounting
nole, inc manufactures and sells two products: product W8 and product N0. data concerning the expected production of each product and the expected total direct labor hours (DLHs) required to produce that output appear below:
expected production direct labor hours per unit total direct labor hours
product W8 100 9.0 900
produdct N0 1,000 11.0 11,000
total direct labor hours 11,900
the direct labor rate is $17.40 per DLH. the direct materials cost per unit for each product is given below:
direct materials cost per units
product W8 $176.40
product N0 $280.50
the company is considering adopting an activity based costing system with the following activity cost pools, activity measures, and expected activity:
expected activity
activity cost pools activity measures estimated overhead cost product W8 product N0 total
labor related DLHs $ 461,720 900 11,000 11,900
machine setups setups 25,865 300 400 700
order size MHs 796,220 4,000 4,200 8,200
1,283,805
1. if the company allocates all of its overhead based on direct labor hours using its traditional costing method, the predetermined overhead rate would be closet to: $38.80 per DLH; $36.95 per DLH; $97.10 per DLH; $107.88 per DLH; and
2. the overhead applied to each unit of product W8 under activity based costing is closet to: $3,884.00 per unit : $1,167.10 per unit: $97092 per unit: $4,344.05 per unit. and
3. which of the following statements concerning the unit product cost of product N0 is true
a. the unit product cost of product N0 under traditional costing is less that its unit product cost under activity based costing by $3,494.65;
b. the unit product cost of product N0 under traditional costing is greater than its unit product cost under activity based costing by $3,494.65:
c. the unit product cost of product N0 under traditional costing is less than its unit product under activity based costing by $337.28:
d. the unit product cost of product N0 under traditional costing is greater than its unit product cost under activity based costing by $337.28.
In: Accounting
A certain type of computer costs $1,000, and the annual holding cost is 25% of the value of the item. Annual demand is 10,000 units, and the order cost is $150 per order. (Assume 250 working days per year)
◦D = _______________
◦S = _______________
◦H = _______________
◦Q* = ______________
◦Total cost = ____________
◦Expected number of orders per year =_______________
Expected time between orders =
In: Operations Management
A sample of college students was asked how much they spent monthly on pizza. Approximate the standard deviation for the cost.
Monthly pizza cost. total number of students
10.99-19.99 7
20.99-29.99 20
30.99-39.99 23
40.99-49.99 20
50.99-59.99 5
The sample standard deviation for the cost is (round to nearest cent)
In: Statistics and Probability
3. the production function is f(L, M)=4*(L^1/2) (M^1/2), where L is the number of units of labor and M is the number of machines used. If the cost of labor is $49 per unit and the cost of machines is $25 per unit, then how much will be the total cost of producing 7 units of output ?
In: Economics
Chloe’s Cafe bakes croissants that it sells to local restaurants and grocery stores. The average costs to bake the croissants are $0.30 for 3,100 and $0.25 for 6,200. Required: If the total cost function for croissants is linear, what will be the average cost to bake 5,400? (Do not round intermediate calculations. Round your final answer to 4 decimal places.)
Average Cost =
In: Accounting
The simple economic order quantity (EOQ) model shows how much to order (i.e., lot size) in terms of holding costs, setup (ordering) costs, and total inventory cost. In terms of this model, why is it necessary to reduce setup cost if we desire smaller lot sizes? Draw the inventory cost curves diagram and fully explain.
In: Operations Management