1. Jimbob Co. is a merchandising company that buys and resells tires for rally race cars. The company's income statements for the last two years are given below: Units sold Sales Less cost of goods sold Gross margin Less operating expenses Net income Last year 2,200 $330,000 220,000 110,000 65,000 $45,000 The company has no beginning or ending inventories. This year 2,000 $300,000 200,000 100,000 60,000 $40,000 Required: a. Estimate the company's total variable cost per unit for operating expenses. b. What is the company's total of fixed costs per year? c. Compute the company's contribution margin for this year.

1. Jimbob Co. is a merchandising company that buys and resells tires for rally race cars. The company's income statements for the last two years are given below: Units sold Sales Less cost of goods sold Gross margin Less operating expenses Net income Last year 2,200 $330,000 220,000 110,000 65,000 $45,000 The company has no beginning or ending inventories. This year 2,000 $300,000 200,000 100,000 60,000 $40,000 Required: a. Estimate the company's total variable cost per unit for operating expenses. b. What is the company's total of fixed costs per year? c. Compute the company's contribution margin for this year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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. Unit product costs, profit and cost of ending inventory. Northern Bicycle produces an inexpensive motorbike that sells for P 12,000. Selected data for the company's operation last year follow: Units in beginning inventory P 300 Units produced 1,000 Units sold 800 Units in ending inventory 500 Variable cost per unit: Direct Materials P 1,300 Direct Labor 800 Manufacturing overhead 500 Selling and administrative 200 Fixed cost per year: Manufacturing overhead P4,000,000 Selling and administrative 2,000,000 Required: 1. Compute the unit costs under absorption and variable costing methods. 2. Compute the operating income under absorption and variable costing methods. 3. Compute the value of ending inventory under absorption and variable costing methods. 4. Reconcile the difference in operating income under the absorption and variable costing methods.
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1. Aladin Company Manufactures small battery that is used in clocks, toys and some other electronic devices. The last month's income statement of Aladin is given below: Sales (30,000 batteries) Less variable expenses Contribution Margin Fixed expenses Net operating income Total $300,000 $180,000 $120,000 $100,000 $20,000 Per Unit $10 $6 $4 Required: Prepare Aladin's new income statement under each of the following conditions: 1. The sales colume increase by 15%. 2. The selling price decreases by 20% per unit, and the sales volume increase by 30%. 3. The selling price increases by 50% per unit, fixed expenses increase by $20,000 and the sales volume decreases by 5%. 4. Variable expenses increases by 20% per unit, the selling price increase by 12%, and the sales volume decrease by 10%.
Hancock Company manufactures and sells two lines of furniture, case goods and upholstery, During the most recent accounting period, the Case Goods and Upholstery Divisions sold 17,400 and 2,360 units, respectively. The company's most recent financial statements are shown below. Sales Less cost of goods sold: Unit-level production cost Depreciation, production equipment Gross margin Less operating expenses: Case Goods Upholstery $1,852,000 $472,000 1,156,000 276,000 $420,000 283,200 70,800 $118,000 Unit-level selling and administrative costs Corporate-level facility expenses (fixed) Net income (loss) If unit sales for both divisions increased 10% the company would report which of the following? 69,600 64,000 $286,400 59,000 64,000 $(5,000)
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ABC Manufacturing produces metal lampposts. The company's income statements for the last two years are given below. The company has no beginning or ending inventories. Last year 60,000 This year 85,000 $2,040,000 Units sold Sales $1,440,000 Less cost of goods sold Gross margin Less operating expenses 785,000 1,060,000 655,000 980,000 237,000 312,000 Net income $418.000 $668.000 Using the high/low method, determine the company's total variable cost per unit. O $15.50 per unit O $12 per unit O $11.75 per unit O $14 per unit
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