Exercise 6-3 (Algo) Allocating transaction price [LO6-4] Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $2,000, sells the remote separately for $125, and offers the installation service separately for $375. The entire package sells for $2,400. Required: How much revenue would be allocated to the TV, the remote, and the installation service? Note: Do not round intermediate calculations. Item Description Allocated Revenue TV Remote Installation Total revenue $ 0

Exercise 6-3 (Algo) Allocating transaction price [LO6-4] Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $2,000, sells the remote separately for $125, and offers the installation service separately for $375. The entire package sells for $2,400. Required: How much revenue would be allocated to the TV, the remote, and the installation service? Note: Do not round intermediate calculations. Item Description Allocated Revenue TV Remote Installation Total revenue $ 0

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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Exercise 6-4 (Algo) Special Order Decision [LO6-4] Imperial Jewelers manufactures and sells a gold bracelet for $402.00. The company's accounting system says that the unit product cost for this bracelet is $265.00 as shown below: Direct materials. Direct labor Manufacturing overhead Unit product cost $ 150 83 32 $ 265 The members of a wedding party have approached Imperial Jewelers about buying 19 of these gold bracelets for the discounted price of $362.00 each. The members of the wedding party would like special filigree applied to the bracelets that would increase the direct materials cost per bracelet by $11. Imperial Jewelers would also have to buy a special tool for $464 to apply the filigree to the bracelets. The special tool would have no other use once the special order is completed. To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any…
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Problem 5-20 (Algo) Evaluating the Profitability of Services [LO5-2, LO5-3, LO5-4, LO5-5] Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.85 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (005) Miles…
Required information PR 7-49 (Static) CVP; Multiple Products; Changes in Costs and Sales Mix (LO 7-4, 7-5) [The following information applies to the questions displayed below.] Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The company's controller, Will Fulton, has just received the sales forecast for the coming year for CTC's three products: hedge clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs over the past two years, and Fulton believes the forecast should be carefully evaluated from a cost-volume-profit viewpoint. The preliminary budget information for 20x2 follows: Unit sales Unit selling price Variable manufacturing cost per unit Variable selling cost per unit Weeders 50,000 $ 28 13 5 Hedge Clippers 50,000 $36 12 4 Leaf Blowers 100,000 $ 48 25 6 For 20x2, CTC's fixed manufacturing overhead is budgeted at $2,000,000, and the company's fixed…
2 S Required information The Foundational 15 (Algo) [LO7-1, LO7-2, LO7-3, LO7-4, LO7-5] [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $77 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 59,000 units and sold 54,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 27 $ 10 $2 $3 Foundational 7-10 (Algo) $ 1,298,000 $ 662,000 The company sold 41,000 units in the East region and 13,000 units in the West region. It determined that $330,000 of its fixed selling and administrative expense is traceable to the West region, $280,000 is traceable to the East region, and the remaining $52,000 is a common fixed expense. The…
Exercise 6-3 (Algo) Allocating transaction price [LO6-4] Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer's home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,575, sells the remote separately for $210, and offers the installation service separately for $315. The entire package sells for $2,000. Required: How much revenue would be allocated to the TV, the remote, and the installation service? (Do not round intermediate calculations.) Item Description TV Remote Installation Total revenue $ Allocated Revenue 0
E 6-6 Performance obligations; customer option for additional goods or services; residual method LO6-2, LO6-4,LO6-5,LO6-6 Clarks Inc., a shoe retailer, sells boots in different styles. In early November, the company starts selling "SunBoots" to customers for $70 per pair. When a customer purchases a pair of SunBoots, Clarks also gives the customer a 30% discount coupon for any additional future purchases made in the next 30 days. Customers can't obtain the discount coupon otherwise. Clarks anticipates that approximately 20% of customers will utilize the coupon, and that on average those customers will purchase additional goods that normally sell for $100. Required: 1. How many performance obligations are in a contract to buy a pair of SunBoots? 2. Assume Clarks cannot estimate the standalone selling price of a pair of SunBoots sold without a coupon. Prepare a journal entry to record revenue for the sale of 1,000 pairs of SunBoots, assuming that Clarks uses the residual method to…
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