Juan Dela Cruz, an entrepreneur, has sold 5,000 units of RCC Pipes for 600/unit. The following are the expenses; materials 800,000.00; labor - 240,000.00, and overhead cost-400,000.00. He has 2 regular administrative staff who are receiving salaries of P-15,000.00 per month. Before his actual operation, he secured permits and licenses amounting to 5,000.00. Prepare the Projected Income Statement for 1 year. Is Mr. Dela Cruz generating profit? Explain. Gross Sales Less Sales Return and Allowances Total Net Sales Less: Cost of Goods Sold Materials/Stocks Labor Overhead Costs Total Gross Profit Less: Operating Costs Salaries and Wages Net Operating Profit Less: Other Expenses Pre-operating Expenses Interests Net Profit Before Tax

Juan Dela Cruz, an entrepreneur, has sold 5,000 units of RCC Pipes for 600/unit. The following are the expenses; materials 800,000.00; labor - 240,000.00, and overhead cost-400,000.00. He has 2 regular administrative staff who are receiving salaries of P-15,000.00 per month. Before his actual operation, he secured permits and licenses amounting to 5,000.00. Prepare the Projected Income Statement for 1 year. Is Mr. Dela Cruz generating profit? Explain. Gross Sales Less Sales Return and Allowances Total Net Sales Less: Cost of Goods Sold Materials/Stocks Labor Overhead Costs Total Gross Profit Less: Operating Costs Salaries and Wages Net Operating Profit Less: Other Expenses Pre-operating Expenses Interests Net Profit Before Tax

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Davy Johnson is CFO for a newly formed manufacturing company. Below is the anticipated monthly production for the first six months of operation. Davy is interested in learning which of the first six months will require cash outlays of more than $40,000 toward the purchase of materials. Each unit requires 5 pounds of material at $10 per pound. All material is purchased in the month prior to its expected use. Purchases are paid for 10% in the month of purchase, 40% in the month following the month of purchase, and 50% in the second month following the month of purchase. Compute the total amount paid for March.
Tim Urban, owner/manager of Urban's Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to Duffy's Maid Service. Tim rents an average of 50 rooms for each of 365 nights (365 x 50 equals the total rooms rented for the year). Tim's cost to clean a room is $13.00. The Duffy's Maid Service quote is $18.00 per room plus a fixed cost of $26,000 for sundry items such as uniforms with the motel's name. Tim's annual fixed cost for space, equipment, and supplies is $61,000. Based on the given information related to costs for each of the options, the crossover point for Tim = ☐ room nights (round your response to the nearest whole number).
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to the salaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. REQUIRED: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing…
Diversified Investor Group is opening an office in Portland, Oregon. Fixed monthly costs are office rent ($8,800), depreciation on office furniture ($2,000), utilities ($2,100), special telephone lines ($1,500), a connection with an online brokerage service ($2,700), and the salary of a financial planner ($10,900). Variable costs include payments to the financial planner (9% of revenue), advertising (11% of revenue), supplies and postage (4% of revenue), and usage fees for the telephone lines and computerized brokerage service (6% of revenue). Read the requirements. Requirement 2. Use the equation approach to compute the dollar revenues needed to earn a monthly target profit of $11,200. Begin by selecting the formula to compute the required sales in units to earn a target profit. = Target profit Rearrange the formula you determined above and compute the required number of trades to earn a monthly target profit of $11,200. Diversified must make trades to earn a monthly operating income…
A motor company needs vital infomation, for calculating the cost of running a motor truck per tonne-kms. Driver expenses is S1800 per month, cleaner sálary is $1260 per month, diesel& oil expenses are $0.90 per km. Then repair with maintenance was $1350 per month. Depreciation charges was 23,400/year/month, other expenses were $1300 per month. The day of week were Monday it runs 350kms carries 8.5 tons, Tuesday it runs 300kms carries 7tons, Wednesday it runs 250kms and carries 6.5tons, Thursday it runs 170 kms and carries 9 tons, Friday it runs 290kms and carries 7.5tons and finally on Saturday it runs 215 kms and carries 6.5 tons. Take five weeks for calculation. Calculate total over head only. 2949 5 2898.7 3878.7 2887.6
Mr. Waqar is employed in a furniture manufacturing concern and he is currently working a total of 11 hours per day to produce 10 chairs. He thinks that by adopting a new method he can increase his rate to 12 chairs per day. The total material cost for each chair is approximately Rs. 600; he has to invest Rs. 700 in the necessary supplies (expendables) per day; energy costs are assumed to be only Rs. 550 per day. Viewing this from a total (multifactor) productivity perspective, what is his productivity at present and with the new method?
ChimneySweep provides cleaning services for residential chimneys and fireplaces. The cleaning service requires $35 in variable costs for cleaning materials. The fixed costs of labor, the company’s truck, and administrative support are $165,000 per year. ChimneySweep averages 100 service calls per month. What is the average cost per cleaning service call? Round your answer to 2 decimal places.
A company employees two consultants who each have a different specialization. Caitlin specializes in industrial commercial construction and Zachary specializes in residential construction. The company expects to incur total overhead costs of $573,540 during the year and applies overhead based on annual salary costs. Caitlin's annual salary is $168,300, and she is expected to bill 2,400 hours during the year. Zachary's annual salary is $92,400, and he is expected to bill 2,200 hours during the year. Required: a. Calculate the predetermined overhead rate. b. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 25% markup, compute the hourly billing rates for Caitlin and Zachary Complete this question by entering your answers in the tabs below. Required A Required B Calculate the predetermined overhead rate. Predetermined overhead rate %
Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales $ 3,240,000 Variable expenses 1,620,000 Contribution margin 1,620,000 Fixed expenses 180,000 Net operating income $ 1,440,000 Required: Answer each question independently based on the original data: 1. The sales manager is convinced that a 12% reduction in the selling price, combined with a $71,000 increase in advertising, would increase this year's unit sales by 25%. a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 2. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.20 per unit. He…
Zachary Modems has excess production capacity and is considering the possibility of making and selling paging equipment. The following estimates are based on a production and sales volume of 3,000 pagers. Unit-level manufacturing costs are expected to be $40. Sales commissions will be established at $3.00 per unit. The current facility- level costs, including depreciation on manufacturing equipment ($80,000), rent on the manufacturing facility ($70,000), depreciation on the administrative equipment ($18,000), and other fixed administrative expenses ($81,950), will not be affected by the production of the pagers. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (pagers) on the basis of the number of units of product made (i.e., 7,000 modems and 3,000 pagers). Required a. Determine the per-unit cost of making and selling 3,000 pagers. (Do not round intermediate calculations. Round your answer to 3 decimal…
BIKE Company starts with $3,000 cash to finance its business plan of producing bike helmets using a simple assembly process. During the first month of business, the company signs sales con- tracts for 1,300 units (sales price of $9 per unit), produces 1,200 units (production cost of $7 per unit), ships 1,100 units, and collects in full for 900 units. Production costs are paid at the time of production. The company has only two other costs: (1) sales commissions of 10% of selling price when the company collects from the customer, and (2) shipping costs of $0.20 per unit paid at time of shipment. Selling price and all costs per unit have been constant and are likely to remain the same. Required: a. Prepare comparative (side-by-side) balance sheets and income statements for the first month of BIKE Company for each of the following three alternatives: (1) Revenue is recognized at the time of shipment. (2) Revenue is recognized at the time of collection. (3) Revenue is recognized at the…
Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales $ 3,120,000 Variable expenses 1,560,000 Contribution margin 1,560,000 Fixed expenses 180,000 Net operating income $ 1,380,000 Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales. 3. Assume this year’s unit sales and total sales increase by 56,000 units and $6,720,000, respectively. If the fixed expenses do not change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's unit sales to increase by 13%. Using the degree of operating leverage from last year, what percentage increase in…