Lisa Hansen is the manager of American Autos. American Autos provides three types of services, Sales, Repairs, and Rebuilds. Lisaneeds to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can beadjusted as needed. She has gathered the following information for the companyCost#of employeesMaint HoursHR HoursRevenue(a)Marketing$207,000SalesRepairs S5Rebuilds S50100SalesRepairs$996.000 $1,307,000Support DepartmentsMaintenance$317,000730025HR$53,000Rebuilds$2.110,000225180Sales$359,0001201001.200Operating UnitsRepairs$871,000161,900850Rebuilds$1.108.0006Allocate the support department costs to the operating units using the reciprocal method. (Do not round the intermediatecalculations. Round answers to O decimal places, a 5.275)2.600800p

Lisa Hansen is the manager of American Autos American Autos provides three types of services, Sales, Repairs, and Rebuilds. Lisa needs to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can be adjusted as needed. She has gathered the following information for the company Cost #of employees Maint Hours: HR Hours Revenue Sales Repairs Marketing $207,000 Rebuilds Sales $996.000 Support Departments Maintenance $317,000 5 50 100 Repairs $1.307,000 7 300 25 HR $53,000 Rebuilds $2.110,000 2 25 180 Sales $359,000 12 800 1.200 Operating Units Repairs $871.000 16 1.900 850 Rebuilds $1.108.000 (a) Allocate the support department costs to the operating units using the reciprocal method. (De not round the intermediate calculations. Round answers to O decimal places, eg 5,2753 2,600 800

Lisa Hansen is the manager of American Autos American Autos provides three types of services, Sales, Repairs, and Rebuilds. Lisa needs to provide a profit analysis to the CEO at the end of the current fiscal year so the pricing and marketing strategies can be adjusted as needed. She has gathered the following information for the company Cost #of employees Maint Hours: HR Hours Revenue Sales Repairs Marketing $207,000 Rebuilds Sales $996.000 Support Departments Maintenance $317,000 5 50 100 Repairs $1.307,000 7 300 25 HR $53,000 Rebuilds $2.110,000 2 25 180 Sales $359,000 12 800 1.200 Operating Units Repairs $871.000 16 1.900 850 Rebuilds $1.108.000 (a) Allocate the support department costs to the operating units using the reciprocal method. (De not round the intermediate calculations. Round answers to O decimal places, eg 5,2753 2,600 800

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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Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. Pretax income ? Gross profit ? Allocated costs (uncontrollable) $2,040 Labor expense 41,580 Sales 190,000 Research and development (uncontrollable) 310 Depreciation expense 18,000 Net income/(loss) ? Cost of goods sold 119,700 Selling expense 1,260 Total expenses ? Marketing costs (uncontrollable) 780 Administrative expense 680 Income tax expense (21% of pretax income) ? Other expenses 320 A. Prepare the income statement using the above information. Round your answers to the nearest dollar. B.Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital.…
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McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 35 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $1,071,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Chairs Desks Sales revenue $1,580,800 $2,786,000 Direct materials 595,000 910,000 Direct labor 230,000 400,000 Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $760,000. The revenue and costs for desks are expected to be the same as last year. What is the…
Ethics and the Manager, Understanding the Impact of Percentage Completion on Profit—Weighted-Average Method Gary Stevens and Mary James are production managers in the Consumer Electronics Division of General Electronics Company, which has several dozen plants scattered in locations throughout the world. Mary manages the plant located in Des Moines, Iowa, while Gary manages the plant in El Segundo, California. Production managers are paid a salary and gel an additional bonus equal to 5% of their base salary if the entire division meets or exceeds its target profits for the year. The bonus is determined in March after the company’s annual report has been prepared and issued to stockholders. Shortly after the beginning of the new year, Mary received a phone call from Gary that went like this: The final processing department in Mary’s production facility began the year with no work in process inventory. During the year, 210,000 units were transferred in from the prior processing department…
McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 25 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $885,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Chairs Desks Sales revenue $ 1,341,600 $ 2,392,000 Direct materials 593,000 890,000 Direct labor 210,000 380,000 Required: a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhead without the chair line will be $740,000. The revenue and costs for desks are expected to be the same as last…
Regular Company produces audio equipment, specifically headphones and speakers. A new CEO has just been hired and announces a new policy that if a product cannot earn a markup of at least 25 percent, it will be dropped. The markup is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $996,000. Overhead is allocated to products based on direct materials cost. Data for year 1 show the following: Headphones Speakers Sales revenue $ 2,247,640 $ 2,141,940 Direct materials 730,000 930,000 Direct labor 492,000 252,000 Required: a-1. Calculate the markup for both headphones and speakers. a-2. Based on the CFO's new policy, which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the speakers from the product line. The company cost analyst estimates that overhead without the speaker line will be $630,000. The revenue and costs for…
Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two operating departments using different allocation bases. The following information is available for the current period: Office Expenses Total Allocation Base Salaries $ 30,000 Number of employees Depreciation 20,000 Cost of goods sold Advertising 40,000 Percentage of total sales Department Number of employees Sales Cost of goods sold Drilling 1,000 $ 325,000 $ 75,000 Grinding 1,500 475,000 125,000 Total 2,500 $ 800,000 $ 200,000 The amount of salaries that should be allocated to Grinding for the current period is:
ABC Corporation has three service department with the following costs and activity base: Service Department Cost Activity Base for Allocation Graphics Production $200,000 Number of Copies Accounting 500,000 Number of invoices processed Personnel Department 400,000 Number of employees ABC has three operating divisions (organized as profit centers), mirco, macro, and super. Their revenue, cost and activity information are-as follows: Mirco Macro Super Direct Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies 20,000 30,000 50,000 Number of invoices 700 800 500 processed Number of employees 130 145 125 How much of the $500,000 total cost from the accounting department would be allocated to the super division?
The centralized computer technology department of Hardy Company has expenses of $320,000. The department has provided a total of 4,000 hours of service for the period. The Retail Division has used 2,750 hours of computer technology service during the period, and the Commercial Division has used 1,250 hours of computer technology service. Additional data for the two divisions is following below: Retail Division Commercial Division Sales $2,150,000 $1,200,000 Cost of goods sold 1,300,000 800,000 Selling expenses 150,000 175,000 Determine the divisional income from operations for the Retail Division and the Commercial Division. Do not round interim calculations. Hardy Company Divisional Income from Operations blank Retail Division Commercial Division $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - Income from operations $fill in the blank 19 $fill in the blank 20 Check My Work PreviousNext
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Naper Inc. manufactures power equipment. Naper has two primary products-generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31: Generators Air Compressors Total $ 4,200,000 (2,940,000) $ 1,260,000 $ 3,000,000 $ 7,200,000 (5,040,000) $ 2,160,000 (610,000) $ 1,550,000 Revenue Cost of goods sold Gross profit Selling and administrative expenses Operating income (2,100,000) $ 900,000 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale…