How do I determine if the standard coffee line should be continued or discontinued?
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Rowan coffee co. Incurs a loss from operations for the standard coffee line. Sales revenue for the line total $72,000 while incurring variable cost of goods sold of $19,500, variable selling expenses of 17,400 and a fixed cost of $ 49,000. How do I determine if the standard coffee line should be continued or discontinued??
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- ABC Furniture uses the installment sales method. No further collections could be made on an account with a balance of P12,000. It was estimated that the repossessed furniture could be sold as is for P3,600, or for P4,200 if P200 were spent reconditioning it. The gross profit rate on the original sale was 40%. The loss on repossession wasP3,200.P3,000.P8,000.P8,400.ABC Corporation manufactures a product that gives rise to a by-product called Z. The only costs associated with Z are selling costs of P1 for each unit sold. ABC accounts for Z sales first b deducting its separable costs from such sales and then by deducting this net amount from cost of sales of the major product. This year, 1,000 units of Z were sold at P4 each. If ABC changes its method of accounting for Z sales by showing the net amount as additional sales revenue, ABC's gross margin would*a. decrease by P3,000b. increase by P4,000c. increase by P3,000d. be unaffectedProduct B has revenue of $39,500, variable cost of goods sold of $25,500, variableselling expenses of $16,500, and fixed costs of $15,000, creating a loss from operationsof $17,500. Prepare and show in solution a differential analysis as of May 9 todetermine if Product B should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision.
- Marinara Sdn.Bhd. (MSB) makes marine equipment. MSB has been experiencing losses for one of its product line called bilge pump. The most recent quarterly income statement for the bilge pump is as follows: RM RM Sales revenue Less: variable costs Manufacturing costs Sales commissions Shipping Total variable costs Contribution margin 850,000 330,000 42,000 18,000 (390,000) 460,000 Less: Fixed costs 270,000 Advertising Depreciation of Equipment General factory overhead Salary-line supervisors Insurance on inventories Purchasing department expense |Total fixed costs Net operating loss 80,000 105,000 32,000 8,000 45,000 (540,000) (80,000) Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company’s total general factory overhead or total purchasing department expenses. The equipment used in this production line cannot be used elsewhere and it has no resale value. REQUIRED: (a) State the basic rule in making decision to…Mr. Pans owns and operates several retail auto parts and accessories outlets. Management is now considering the possibility of terminating the operation of the Accessories Store and leasing the facilities to another retailer. The monthly results of the Accessories Store operations are as follows: Sales P940,000 · Operating expenses directly identifiable with the outlet: Cost of goods sold, etc P890,000 Depreciation 80,000 If operation of Accessories Store is terminated, Mr. Pans can rent-out the facilities for P60,000 a month to a non-competing business. Determine whether the company should continue operations or terminate the Accessories Store and rent-out the facilities. How much is the advantage of better option? 1. Coniinue the Accessories Store – advantage of P 50,000 2. Terminate operation of Accessories Store - advantage of P50,000 3. Continue the Accessories Store - advantage of P10,000 | 4. Terminate operation of Accessories Store - advantage of P10,0001. A hotel receives advance payment of 2,500,000 from a conference organizer. This is not a sale due to the ______ principle. 2. Resto Supplies, Inc. takes a 32,000 loss on a number of older ovens in its inventory; it paid the manufacturer 107,000 for them but can sell them for only 75,000 Choices: a. Full disclosure principle b. Time period assumption c. Materiality constraint d. Cost Principle e. Revenue recognition principle f. Conservatism Constraint g. Matching principle h. Economic entity assumption i. Monetary unit j. Going concern k. Some other answers
- The following information regarding fixed production costs from a manufacturing firm is available for the current year: Fixed costs in the beginning inventory - P16,000; Fixed costs incurred this period - P100,000. Which of the following statements is not true? * a. The maximum amount of fixed production costs that this firm could deduct using absorption costs in the current year is P116,000. b. The maximum difference between this firm's the current year income based on absorption costing and its income based on variable costing is P16,000. c. Using variable costing, this firm will deduct no more than P16,000 for fixed production costs. d. If this firm produced substantially more units than it sold in the current year, variable costing will probably yield a lower income than absorption costing.Outlook Corporation sells gas stoves. Its sales had a total of P250,000 during its first year of operation. All its sales were installment sales and it managed to collect only P80,000 in the said year.Outlook repossessed one gas stove after a customer defaulted in payment. The balance of the receivable pertaining to the repossessed stove was P25,000 at the time of repossession. How much is the deferred gross profit at year end if the gross margin ratio is 25%?a. P145,000 c. P170,000b. P36,250 d. P42,500A firm bought a used machine 2 years ago for $1500. When new, the machine cost $8000. Today it could be sold for $500. Which of the following statements is true? (a) The fixed cost for operating the machine can be ignored in any analysis. (b) The $8000 purchase price is not included in the analysis. (c) The $1500 paid 2 years ago is included in the analysis. (d) The variable cost of ownership is the difference between what was paid and what the machine is now worth ($1500 – $500 = $1000).
- Honda Fit Ltd purchased a new piece of machinery to expand the production output of its top-of-the-line car model. The marginal income ratio is 64% and the company has R3 200 000 as fixed costs. After the machine was purchased, the company achieved a sales revenue of R5 600 000. Determine the company’s margin of safety in percentage terms and comment.The Tolar Corporation has 400 obsolete desk calculators that are carried in inventory at a total cost of $576,000. If these calculators are upgraded at a total cost of $100,000, they can be sold for a total of $160,000. As an alternative, the calculators can be sold in their present condition for $40,000. What is the financial advantage (disadvantage) to the company from upgrading the calculators? Multiple Choice $20,000 $(560,000) $120,000 $(60,000XY Ltd sells 2 products which are manufactured in one plant. During the year 2009, it planned to sell the following quantities of each product Q1 Q2 Q3 Q4 X(Units) 90,000 230,000 300,000 80,000 Y(Units) 65,000 75,000 55,000 85,000 Product X sells at Ksh 10 per unit while Y at Ksh20 per unit. A study of past experience reveals that XY limited loses 3% of its billed revenue each year due to bad debts. REQUIRED: Prepare sales budget incorporating the given information.
