Can I please get help with this quesiton? The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (2,000 units × $125) $250,000 Cost of goods sold (2,000 units × $65) (130,000) Gross margin 120,000 Sales commissions (10% of sales) (25,000) Administrative salaries expense (30,000) Advertising expense (20,000) Depreciation expense (24,000) Shipping and handling expenses (2,000 units × $1.00) (2,000) Net income $19,000 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent.
Can I please get help with this quesiton? The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, Year 1 Sales revenue (2,000 units × $125) $250,000 Cost of goods sold (2,000 units × $65) (130,000) Gross margin 120,000 Sales commissions (10% of sales) (25,000) Administrative salaries expense (30,000) Advertising expense (20,000) Depreciation expense (24,000) Shipping and handling expenses (2,000 units × $1.00) (2,000) Net income $19,000 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
Can I please get help with this quesiton?
The following income statement was drawn from the records of Joel Company, a merchandising firm:
| JOEL COMPANY | |
| Income Statement | |
| For the Year Ended December 31, Year 1 | |
| Sales revenue (2,000 units × $125) | $250,000 |
|---|---|
| Cost of goods sold (2,000 units × $65) | (130,000) |
| Gross margin | 120,000 |
| Sales commissions (10% of sales) | (25,000) |
| Administrative salaries expense | (30,000) |
| Advertising expense | (20,000) |
| (24,000) | |
| Shipping and handling expenses (2,000 units × $1.00) | (2,000) |
| Net income | $19,000 |
Required
-
Reconstruct the income statement using the contribution margin format.
-
Calculate the magnitude of operating leverage.
-
Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10 percent.
Transcribed Image Text:Leach Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between
6,000 and 12,000 trophies per year. The following cost data apply to various activity levels:
Required
Complete the following table by filling in the missing amounts for the levels of activity shown in the first row of the table.
Note: Round "Cost per unit" answers to 2 decimal places.
Number of Trophies
Total costs incurred
Fixed
Variable
Total costs
Cost per unit
Fixed
Variable
Total cost per trophy
$
$
$
$
6,000
60,000
60,000
120,000
10.00
10.00
20.00
8,000
10,000
12,000
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req A
Req B and C
b. Calculate the magnitude of operating leverage.
c. Use the measure of operating leverage to determine the amount of net income Joel will earn if sales increase by 10
percent.
Note: Round your intermediate calculations and the final answer for "Operating leverage" to 2 decimal place.
b. Operating leverage
c. Net income
< Req A
Req B and C >
Show less
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education