Problem 7.8A The Cash account in the general ledger of Hendry Corporation show> a balance of $96,990 at 31 December 2013 (prior to performing a bank reconciliation). The company's bank stalement shows a balance of $100,560 at the same datc. An examination of the bank statement reveals the following: 1. Deposits in transit amount to $24,600. Bank service charges total $200. 3. Outstanding checks total $31,700. A $3,600 check marked "NSF" from Kent Company (one of Hendry Corporation*s customers) was returned to Hendry Corporation by the bank. This was the only NSF check that Hendry Corporation received during 2013. A canceled check (no. 244) written by Hendry Corporation in the amount of $1,250 for office equipment was incorrectly recorded in the general ledger as a debit to Office Equipment of $1,520, and a credit to Cash of $1,520. 2. 4. 5. Prepare Hendry Corporation's bank reconciliation daled 31 December 2013, and provide the journal entry necessary to update the company's general ledger balances. a.
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
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