As the new accountant for Cohen & Company, you have been asked to provide a succinct analysis of financial performance for theyear just ended. You obtain the following information that pertains to the company's sole product:ActualMaster Budget40,000$ 470,000278,000135,000Units sold35,000$ 398,000228,000137,000SalesVariable costsFixed costsRequired:1. What was the actual operating income for the period?2. What was the company's master budget operating income for the period?3. (a) What was the total master budget variance, in terms of operating income, for the period? (b) Is this variance favorable orunfavorable? (If a variance has no amount, select "None" in the corresponding dropdown cell.)4. The total master budget variance for a period can be decomposed into a total flexible budget variance and a sales volume variance.(a) What was the total flexible-budget variance for the period? (b) Was this variance favorable or unfavorable? (c) What was the salesvolume variance for the period? (d) Was this variance favorable or unfavorable? (If a variance has no amount, select "None" in thecorresponding dropdown cell.)Answer is complete but not entirely correct.Actual operating incomeMaster budget operating incomeTotal master budget varianceTotal flexible-budget variance1.16,875 82.2410,0006,875 8 Favorable26,250 8 Unfavorable3.4.Sales volume variance19,375 8 Unfavorable

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Answered: As the new accountant for Cohen &…

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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The South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 1. 2. 3. Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. Return on Investment $2,950,000 1,947,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $155,000. Reduce average operating assets by 4%. Action 1 595,000 (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.) Action 2 5,000,000 Action 3 (b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%.) Return on investment do % % % %
ulcan Company's contribution format income statement for June is as follows: Vulcan Company Income Statement For the Month Ended June 30 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 900,000 408,000 492,000 455,000 $ 37,000 Management is disappointed with the company's performance and is wondering what can be done to improve profits. By examining sales and cost records, you have determined the following: a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and $208,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $164,000 and $125,000 are traceable to the Northern and Southern Territories, respectively. The rest of the fixed expenses are common to the two territories. b. The company is the exclusive distributor for two products-Paks and Tibs. Sales of Paks and Tibs totaled $150,000 and…
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Bramble Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $217,000; and fixed costs $70,000. Management is considering the following independent courses of action to increase net income.Compute the net income to be earned under each alternative.1. Increase selling price by 10% with no change in total variable costs or sales volume. Net income $enter a net income if the selling price is increased by 10% 2. Reduce variable costs to 55% of sales. Net income $enter a net income if the variable costs are reduced to 55% of sales 3. Reduce fixed costs by $18,000. Net income $enter a net income if the fixed costs are reduced by $18,000
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Refer to the income statements in requirement 1 above. For both current operations and the proposed new operations, compute (a) the degree of operating leverage, (b) the break-even point in dollars, and (c) the margin of safety in both dollar and percentage terms.

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