Week 8 Seminar Question Chimco is a limited company operating in the Hat making industry in East England. Below is a cost breakdown of their activities for the year 2020. Their business has been severely impacted by the Covid-19 lockdowns as they people were confined to their houses due to Government regulations. Items Cost per Actual (£) unit Units 100,000 Selling price 35 30 Revenue 3,000,000 Variable costs: Materials 3.50 380,000 Labour 540,000 Overhead 2.50 250,000 Contribution 24 1,830,000 Fixed overheads: Warehouse rental 350,000 200,000 Insurance 150,000 150,000 Fulltime supervisor 60,000 45,000 salary Profit 1,435,000 (i) Prepare the monthly control report showing original budget, flexed budget, and variances. (ii) Using your control report prepared in (i) above, prepare a report on Chimco's performance during the year 2020. (iii) Provide recommendations to Chimco's CEO on areas of improvement.

Week 8 Seminar Question Chimco is a limited company operating in the Hat making industry in East England. Below is a cost breakdown of their activities for the year 2020. Their business has been severely impacted by the Covid-19 lockdowns as they people were confined to their houses due to Government regulations. Items Cost per Actual (£) unit Units 100,000 Selling price 35 30 Revenue 3,000,000 Variable costs: Materials 3.50 380,000 Labour 540,000 Overhead 2.50 250,000 Contribution 24 1,830,000 Fixed overheads: Warehouse rental 350,000 200,000 Insurance 150,000 150,000 Fulltime supervisor 60,000 45,000 salary Profit 1,435,000 (i) Prepare the monthly control report showing original budget, flexed budget, and variances. (ii) Using your control report prepared in (i) above, prepare a report on Chimco's performance during the year 2020. (iii) Provide recommendations to Chimco's CEO on areas of improvement.

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

Churchill Chocolates owns and operates polar bear-themed chocolate stores in separate geographical areas throughout Manitoba. Due to the negative economic effects of the coronavirus pandemic, Churchill Chocolates decided to sell its store in Portage la Prairie on October 31, 2020. The Portage la Prairie store suffered a loss of $250,000 in 2020, which included $200,000 from January 1 to October 31, 2020. At Churchill Chocolates’ year-end (December 31, 2020), the carrying (book) value of the Portage la Prairie assets is $6,300,000 and the fair value is $6,000,000. MNP has been appointed to assist with this sale. They have estimated the costs to sell the Portage la Prairie store at $275,000. The provincial and federal tax rates are a combined 20%. The store has not sold as at December 31, 2020. Required Assume the Portage la Prairie store qualifies for reporting as a discontinued operation. In the discontinued operations section of Churchill Chocolates’ 2020 income statement, what amount…
WBM Motorworks is a manufacturer of high-end touring and off-road motorcycles. On November 30, the company was sued by a customer who was injured when the front shock absorber on the WBM Series 3 motorcycle cracked during use. The company conducted a preliminary investigation into the matter during December and found evidence of amanufacturing defect in the shock absorber. While it is uncertain whether the manufacturing defect is the source of the product failure, the company has voluntarily recalled the front shock absorbers on the Series 3 motorcycles. The company is uncertain how the lawsuit will be resolved. Similar lawsuits against other manufacturers have been settledfor approximately $2,000,000.Write a brief memo to the president of WBM Motorworks, U. D. Mach III,discussing how the lawsuit might be reported in the financial statements.
During the company’s product manufacturing operations, an incidental by-product appeared, which is a frame for paintings, in the month of August 2018. The company sold it for 1,200 dinars, but it paid the expenses related to the incidental product for the same month in the amount of 200 dinars. • - During the month of August 2018, the company classified its table product as It is considered the main product of the company during that month, and the art frame product is the incidental product. The production quantity of the tables product during the month of August 2018 was 3,500 tables, of which only 3,000 tables were sold at a price of 60 dinars per table, and the share of the tables as a main product was the joint costs in the month. August 30,000 dinars. In your opinion, how will the company’s income statement for August 2018 be prepared, and the company’s net incidental by-product revenues be treated? According to the following: Considering the revenue of the sub-product as the…
You are the cost accountant for Fashions, Inc. On July 31, 2002, a fire destroyed part of your company's office building factory. Inventories were totally destroyed, and many of the accountant records were damaged or destroyed by the fire. You have been given the responsibility for recovering enough cost data to file an insurance claim. You were able to recover the following. Cost of goods available for sale for July amounted to $395,000, sales totaled $625,000, and gross profit sales was 40%. in addition, raw materials used in July amounted to 175,000. and raw materials purchased totaled $172,500. Direct labor cost for July was $125,000. Based on past results, you know that manufacturing overhead is 60% of direct labor cost. You are able to retrieve a copy of the June Balance sheet, and it indicates that inventories of June 30 were as follows: Work in process inventory, $11,000 Finished Goods inventory $18,000 Raw Materials $9,500 You must determine the amount of your…
The Star Paper Division of Royal Industries is located near Los Angeles. A major expansion of the division’s only plant was completed in April 2007. The expansion consisted of an addition to the existing building, additions to the production-line machinery, and the replacement of obsolete and fully depreciated equipment that was no longer efficient or cost effective.On May 1, 2007, George Harris became manager of Star. Harris had a meeting with Marie Fortner, vice president of operations for Royal, who explained to Harris that the company measured the performance of divisions and division managers on the basis of return on gross assets (ROA). When Harris asked if othermeasures were used in conjunction with ROA, Fortner replied, ‘‘Royal’s top management prefers to use a single performance measure. Star should do well this year now that it has expanded and replaced all of that old equipment. You should have no problem exceeding the division’s historical rate. I’ll check with you at the…
Pharoah Industries carries no inventories. Its product is manufactured only when a customer's order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2020, Pharoah's break-even point was $1.38 million. On sales of $119 million, its income statement showed a gross profit of $178,800, direct materials cost of $405.000, and direct labor costs of $503,000. The contribution margin was $142,800, and variable manufacturing overhead was $51,000. (a) Your Answer Correct Answer (Used) - Your answer is partially correct. Calculate the following: 1. Variable selling and administrative expenses. 88200 2. Fixed manufacturing overhead. 24 165600 3. Fixed selling and administrative expenses. 113400 eTextbook and Media Solution Attempts: 3 of 3 used (b) Your answer is incorrect. Ignore your answer to above part, assume that fixed manufacturing overhead was $100,000 and the fixed selling and administrative expenses were $82,000. The marketing vice…
The Iron City Company started business on January 1, 2017. Iron City manufactures a specialty honey beer, which it sells directly to state-owned distributors in Pennsylvania. Honey beer is produced and sold in six-packs, and in 2017, Iron City produced more six-packs than it was able to sell. In addition to variable and fixed manufacturing overhead, Iron City incurred direct materials costs of $880,000, direct manufacturing labor costs of $400,000, and fixed marketing and administrative costs of $295,000. For the year, Iron City sold a total of 180,000 six-packs for a sales revenue of $2,250,000. Iron City’s CFO is convinced that the firm should use an actual costing system but is debating whether to follow variable or absorption costing. The controller notes that Iron City’s operating income for the year would be $438,000 under variable costing and $461,000 under absorption costing. Moreover, the ending f inished-goods inventory would be valued at $7.15 under variable costing and…
min.4
Cranberry has received a special order for 170 units of its product at a special price of $2,350. The product normally sells.for $2,850 and has the following manufacturing costs: Per unit Direct materials 770 Direct labor 470 Variable manufacturing overhead 570 Fixed manufacturing overhead 670 51 Unit cost $2,480 Assume that Cranberry has sufficient capacity to fill the order without harming normal production and sales. If Cranberry accepts the order, what effect will the order have on the company's short-term profit?
XYZ Industries Company operates in Oman and supplies its products to the Omani and local market in addition to the Gulf markets.With the beginning of 2020, the Cocod-19 crisis appeared which affected the economies of all countries around the world. The impact of Cocod-19 on the work of companies varies according to the industrial sector in which the company operates.With the beginning of the year 2021, the government began applying value-added tax ( VAT) , which has a direct impact on the prices of goods and services provided in Oman.Based on what you have studied on the topic of risks and returns in the corporate finance course, answer the following questions: 1- What are the most important types of risks that XYZ Industries Company was exposed to in Oman? (Risks are: default, Inflation, Maturity, Liquidity)2- What are the most important measures that can be taken to reduce these risks?3- What is the potential impact of VAT on the company?
Capitol, Incorporated, has received a special order for 2,080 units of its product at a special price of $158. The product normally sells for $208 and has the following manufacturing costs: Cost per Unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost $ 58 38 28 48 $ 172 Assume that Capitol has sufficient capacity to fill the order without harming normal production and sales. Required: a. If Capitol accepts the order, what effect will the order have on the company's short-term profit? b. What minimum unit price should Capitol charge to achieve a $48,000 incremental profit? c. Now, assume Capitol is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Capitol accepts the order, what effect will the order have on the company's short-term profit? Complete this question by entering your answers in the tabs below. Required A Required B Required C If Capitol accepts the order,…
The following items pertain to possible provisions: a. A company uses a part manufactured in Germany in its automobile manufacturing plant. There has been a concern about the failure of this part in cars manufactured in Germany. No failures have occurred to date in Canada. The company decided to do a voluntary recall of all cars manufactured with this part. The recall is 40% complete and has cost $1,250,000 to date. b. A company self-insures for floods. That is, it pays no insurance but is liable to replace assets lost through flood damage. No losses have been incurred this year, but there have been $225,000 of losses in most other years, and the company is concerned that there might well be $450,000 of losses next year, evening out the pattern. c. A company offers a three-year guarantee over parts and labour for products sold to ensure that parts work as expected. There were no payments this year, and only 5% of products sold this year are expected to need repairs in the next year.…