Outdoor World, Inc., manufactures camping equipment. Shown for the current year are the incomestatement for the company and a common size summary for the industry in which the companyoperates. Outdoor World, Inc. Industry Average Sales (net) $ 20,000,000 100 % Cost of goods sold9,800,000 58 Gross profit on sales $10,200,000 42 % Operating expenses: Selling $ 4,200,000 16 % Generaland administrative 3,400,000 20 Total operating expenses $7,600,000 36 % Operating income $2,600,000 6 % Income tax expense 1,200,000 3 Net income $1,400,000 3 % Return on assets 23 % 14%Required: a. Prepare a common size income statement. The first column should show for OutdoorWorld, Inc., all items expressed as a percentage of net sales. The second column has been completedand shows the equivalent industry average for the data given in the problem. The purpose of thiscommon size statement is to compare the operating results of Outdoor World, Inc., with the average forthe industry. b. If results of Outdoor World is better or worse than industry average.

Results of Outdoor World is better than industry average as its gross profit ratio, operating profit…

Answered: Outdoor World, Inc., manufactures…

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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Anheuser-Busch InBev Companies, Inc., reported the following operating information for a recent year: Sales $11,136,000 Cost of goods sold $2,784,000 Selling, general and administration 1,044,000 $3,828,000 Income from operations $ 7,308,000* *Before special items In addition, assume that Anheuser-Busch InBev sold 58,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general, and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that Anheuser-Busch InBev expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $36,500. a. Compute the break-even number of barrels for the current year. Round to the nearest whole barrel.fill in the blank 1 barrels b. Compute the anticipated break-even number of barrels for the following year. Round to…
The income statement for the RUN-84979 company, an atletic shoe retailer, for the first quarter of the year is presented below: RUN-84979 Income Statement Sales $151,200 54,600 96,600 Cost of goods sold Gross margin Selling and administrative expenses Selling Administration $45,400 29,096 74,496 Net operating income $ 22,104 On average, an athletic shoe sells for $72. Variable selling expenses are $14 per athletic shoe, and the remaining selling expenses are fixed. The variable administrative expenses are 8% of sales with the remainder being fixed. How much is the total contribution margin for RUN-84979 for the first quarter?
Whitman Company Income Statement Sales (38,000 units $41.60 per unit) Cost of goods sold (38,000 units x $23 per unit) Gross margin Selling and administrative expenses $ 1,580,800 874,000 706,800 475,000 Net operating income $ 231,800 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variab expenses. The $23 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead $ 11 4 4 Fixed manufacturing overhead ($216,000 + 54,000 units) Absorption costing unit product cost 4 $ 23 Required: 1. Redo the company's Income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating Income on your variable costing Income statement and the net operating Income on the absorption costing Income statement above. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Redo the company's…
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2. A condensed income statement by product line for Master Energy Co. indicated the following for the Master Energy product line for the past year: Revenues and Costs Dollar Amount Sales $12,500,000 Cost of goods sold Gross profit Operating expenses Loss from operations 8,250,000 4,250,000 6,010,000 (1,760,000) It is estimated that 25% of the cost of goods sold represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Master Energy is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated January 31st to determine whether Master Energy should be continued (Alternative 1) or discontinued (Alternative 2). b. Should Master Energy be retained? Explain.
Zachary Company operates three segments Income statements for the segments imply that profitability could be improved if Segment A were eliminated. ZACHARY COMPANY Income Statements for Year 2 Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) Required a. Prepare a schedule of relevant sales and costs for Segment A A $ 168,000 (126,000) (20,000) 22,000 (34,000) (6,000) B $ 235,000 (79,000) (32,000) 124,000 (51,000) (19,000) $ (18,000) $ 54,000 $ 253,000 (82,000) (28,000) 143,000 (34,000) $ 109,000 b. Prepare comparative income statements for the company as a whole under two alternatives (1) the retention of Segment A and (2) the elimination of Segment A Complete this question by entering your answers in the tabs below.. Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Revenue and Cost…
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Suresh Company reports the following segment (department) income results for the year. Department M Department N Department 0 Department P $ 82,000 $ 44,000 $ 78,000 $ 65,000 Sales Expenses Avoidable Unavoidable Total expenses Income (loss) Department Department M Department N Department O Department P Department T 17,300 45,400 57,800 21,600 75, 100 67,000 $ 6,900 $ (23,000) Decision 18,000 5,700 23,700 $ 54,300 21,500 54,300 75,800 $ (10,800) Department T $ 43,000 51,300 20,300 71, 600 $ (28,600) Total $ 312,000 a. If the company plans to eliminate departments that have sales less than avoidable costs, which department(s) would be eliminated? 153,500 159, 700 313, 200 $ (1,200)
Flamengo Co is a sporting goods manufacturing. Last year, report the following Income Statement: Sales $620,000 Cost of goods sold 316,000 Gross margin $304,000 Selling and administrative expense 246,000 Operating income $ 58,000 Less: Income taxes (at 40%) 34,000 Net income $ 24,000 At the beginning of the year, the value of operating assets was $263,000. At the end of the year, the value of operating assets was $363,000. Flamengo Co. requires a minimum rate of return of 15%. Total capital employed equals $350,000 and the actual cost of capital is 6%, Calculate the Return on Investment. (Carry computations out to two decimal places.)
Calculating Economic Value Added Barnard Manufacturing earned operating income last year as shown in the following income statement: Sales $4,000,000 Cost of goods sold 2,100,000 Gross margin $1,900,000 Selling and administrative expense 1,100,000 Operating income $800,000 Less: Income taxes (@ 40%) 320,000 Net income $480,000 At the beginning of the year, the value of operating assets was $2,700,000. At the end of the year, the value of operating assets was $2,300,000. Total capital employed equaled $1,400,000. Barnard’s actual cost of capital is 12%. Required: Calculate the EVA for Barnard Manufacturing.
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