QUESTION THREE ERS Itd is a company engaged in the manufacture of sports shoes. The last financial year to 31 January has seen the company produce its lowest profit for five years. The summary profit and loss account for the year to 31* January is set out below к K Sales revenue (50,000 shoes @ K70) 3,500,000 Cost of sales Direct materials 1,400,000 Direct labour 1,150,000 Variable manufacturing overheads 200,000 Fixed manufacturing overheads 410.000 Total manufacturing costs 3.160.000 Gross profit 340,000 Selling and distribution overheads (Fixed) 134,000

QUESTION THREE ERS Itd is a company engaged in the manufacture of sports shoes. The last financial year to 31 January has seen the company produce its lowest profit for five years. The summary profit and loss account for the year to 31* January is set out below к K Sales revenue (50,000 shoes @ K70) 3,500,000 Cost of sales Direct materials 1,400,000 Direct labour 1,150,000 Variable manufacturing overheads 200,000 Fixed manufacturing overheads 410.000 Total manufacturing costs 3.160.000 Gross profit 340,000 Selling and distribution overheads (Fixed) 134,000

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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Analyze Operational ChangesRichmond's is a retail store with eight departments, including a garden department that has been operating at a loss. The following condensed income statement gives the latest year's operating results: Garden Department All Other Departments Sales $504,000 $3,600,000 Cost of sales 302,400 2,340,000 Gross profit 201,600 1,260,000 Direct expenses 162,000 409,500 Common expenses 72,000 468,000 Total expenses 234,000 877,500 Net income (Loss) $(32,400) $382,500 a. Calculate the gross profit percentage for the garden department and for the other departments as a group. Garden department Answer% All other departments Answer% b. Suppose that if the garden department were discontinued, the space occupied could be rented to an outside firm for $27,000 per year, and the common expenses of the firm would be reduced by $6,700. What effect would this action have on Richmond's net income? (Ignore income tax in your calculations.)…
ERS Itd is a company engaged in the manufacture of sports shoes. The last financial year to 31 January has seen the company produce its lowest profit for five years. The summary profit and loss account for the year to 31st January is set out below : KK Sales revenue (50,000 shoes @ K70) 3,500,000 Cost of sales Direct materials 1,400,000 Direct labour 1,150,000 Variable manufacturing overheads 200,000 Fixed manufacturing overheads 410,000 Total manufacturing costs 3, 160,000 Gross profit 340,000 Selling and distribution overheads (Fixed) 134,000 Administration cost 148, 400 Net profit 57, 600 REQUIRED: Compute the break - even level of activity and revenue to break - even on the basis of last year's results.
PROBLEM 4- Betty, Inc., incurs the following costs to produce and sell a single product. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses P10 P5 P2 P4 P90,000 P300,000 During the last year, 30,000 units were produced and 25,000 units were sold. The Finished Goods inventory account at the end of the year shows a balance of P85,000 for the 5,000 unsold units. Required: 1. Is the company using absorption costing or variable costing to cost units in the Finished Goods inventory account? Show computations to support your answer. 2. Assume that the company wishes to prepare financial statements for the year to issue to its stockholders. a. Is the P85,000 figure for Finished Goods inventory the correct amount to use on these statements for external reporting purposes? Explain. b. At what dollar amount should the 5,000…
Question 2 Capstone Company has two divisions. The Bottle Division produces products that have variable costs of $3 per unit. It has annual production of 200,000 units. 160,000 units of the products are sold to outsiders at $5 per unit and 40,000 units to the Mixing Division. The fixed costs of the Bottle Division are $125,000 per year. There was no beginning or ending inventories during the year. Mixing sells its finished products to outside customers for $11.50 per unit. Mixing has variable costs of $2.50 per unit in addition to the costs from the Bottle Division. The annual fixed costs of Mixing were $85,000. There was no beginning or ending inventories during the year. Required: a) How much should be the minimum transfer price: (i) if market for the products from Bottle Division is perfectly competitive? (ii) if intermediate market exists that is not perfectly competitive, and the Bottle Division has no unused capacity?
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Algo Identifying upstream and downstream cost LO During year 2, Thornton's manufacturing company incurred $115,200,000 of research and development (R&D) cost to create a long-life battery to use in computers. in accordance with FASB standards, the entire R&D cost was recognized as an expense in year 2 manufacturing costs ( direct materials, direct labor, and overhead) are expected to be $60 per unit. Packaging shipping, and sales commissions are expected to be $17 per unit. Thornton expects to sell 2,4000,000 batteries before new research renders the battery design technologically obsolete. During year 2, Thornton made 432,000 batteries and sold 407,000 of them Required a) Identify the upstream and downstream costs b) Determine the year 2 amount of goods sold and the ending inventory balance that would appear on the financial statements that are prepared in accordance with GAAP c) Determine the sales price assuming that Thornton desires to earn a profit margin that is equal to…
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PROBLEM 4 Marquess Corporation has provided the following partial listing of costs incurred during May: Marketing salaries. $39,000 $8,000 Property taxes, factory Administrative travel. $102,000 $73,000 $31,000 $197,000 $145,000 $39,000 $78,000 Sales commissions Indirect labor. Direct materials. Advertising. Depreciation of production equipment....... Direct labor.... Required: a. What is the total amount of product cost listed above? Show your work. b. What is the total amount of period cost listed above? Show your work.