Fixed costs are 45% of the cost of goods sold and 15% of the selling and administrative expenses. Porcelain Tableware assumes that fixed costs would not be significantly affected if the Cups line were discontinued.

a. Prepare a differential analysis report for all three products.

1- The following chart is data over an 8 month period that shows how much a company spent in advertising and the sales revenue for that month

E.) What sales revenue would the company expect for the following advertising spending? Round to nearest cent

1. 3000
2. 2100
3. 1300

F.) If you were in charge of the advertising department how much would you spend on each of the next 4 months on advertising and how and why did you arrive at your decision?

Nov

Jan

Feb

March

Please give a short explanation as to how and why you came up with your advertising spending for the above 4 months

(Please show work so I can learn how to do it)

c.) For each company, compute net income as a percentage of revenue in 2017.              

d.) For each company, calculate working capital and current ratio for 2017 and 2016. How did they change from 2016 to 2017 (improve or worsen)? What may have caused those changes?    

Below are three independent and unrelated errors.

On December 31, 2017, Wolfe-Bache Corporation failed to accrue office supplies expense of $1,750. In January 2018, when it received the bill from its supplier, Wolfe-Bache made the following entry:

On the last day of 2017, Midwest Importers received a $89,000 prepayment from a tenant for 2018 rent of a building. Midwest recorded the receipt as rent revenue.

At the end of 2017, Dinkins-Lowery Corporation failed to accrue interest of $7,900 on a note receivable. At the beginning of 2018, when the company received the cash, it was recorded as interest revenue.

   
Required:
For each error:
1. What would be the effect of each error on the income statement and the balance sheet in the 2017 financial statements?
2. Prepare any journal entries each company should record in 2018 to correct the errors.
  

Below are three independent and unrelated errors.

On December 31, 2017, Wolfe-Bache Corporation failed to accrue office supplies expense of $1,300. In January 2018, when it received the bill from its supplier, Wolfe-Bache made the following entry:

Office supplies expense 1,300

Cash 1,300

On the last day of 2017, Midwest Importers received a $80,000 prepayment from a tenant for 2018 rent of a building. Midwest recorded the receipt as rent revenue.

At the end of 2017, Dinkins-Lowery Corporation failed to accrue interest of $7,000 on a note receivable. At the beginning of 2018, when the company received the cash, it was recorded as interest revenue.

Required:

For each error:

1. What would be the effect of each error on the income statement and the balance sheet in the 2017 financial statements?

2. Prepare any journal entries each company should record in 2018 to correct the errors.

One year ago your company purchased a machine for $110,000. You have learned that a new, much better machine is available for $150,000--it will be depreciated on a straight line basis and has no salvage value. You expect the machine to produce $60,000 per year in revenue and cost $20,000 per year to operate for the next ten years. The current machine is expected to produce $40,000 per year in revenue and also costs $20,000 per year to operate. The current machine’s depreciation expense is $10,000 per year for the next 10 years, after which it will be discarded. It will have no salvage value. The market value of the current machine today is $50,000. Your company’s tax rate is 45% and the opportunity cost of capital is 10%. Should your company replace its year-old machine?

PLEASE SHOW ALL WORK

The Katy Company engages in the manufacture and sale of books worldwide. Its income statement for the year ending June 30, 2019 and selected amounts from its June 30, 2019 balance sheet follow:

The variable costing concept removes fixed costs, which are uncontrollable, from the decision-making process (see variable costing income statement). This forces management to focus on the variable factors of production, sales revenue and variable costs. I remember learning this concept in economics at LBCC, where a company should shut down if a product’s price falls below variable cost and just incur fixed costs.

Have you ever heard the saying “The company loses $1.00 on every unit sold, but we are confident the losses can be made up on volume.” Really?

In theory, companies should not operate with a negative contribution margin (sales revenue-variable costs), but my guess is that some do especially in this economic environment?

Do you think companies actually operate (or produce products) with a negative contribution margin?

Wegmans food stores conducted a study to see how many customers will return to the same store in the future. The study showed that 40% of the customers visiting a specific store will return in the future to the same store. Suppose seven customers are selected at random, what is the probability that:

(a) Exactly four customers will return?

(b) All seven customers will return?

(c) At least six customers will return?

(d) At least one customer will return?

(e) How many customers would be expected to return to the same store?