Sarasota, Inc. is a company that manufactures and sells a single product. Unit sales for each of the four quarters of 2020 are projected as follows. Quarter Units First 64,000 Second 120,000 Third 440,000 Fourth 96,000 Annual total 720,000 Sarasota incurs variable manufacturing costs of $0.40 per unit and variable nonmanufacturing costs of $0.35 per unit. Sarasota will incur fixed manufacturing costs of $576,000 and fixed nonmanufacturing costs of $864,000. Sarasota will sell its product for $4 per unit. 1. Determine the amount of net income Sarasota will report in each of the four quarters of 2020, assuming actual sales are as projected and employing the integral approach to interim financial reporting. (Ignore income taxes.) Repeat the analysis under the discrete approach. (Round answers to 0 decimal places) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Net income (Integral Approach) Net income (Discrete Approach) 2. Compute Flounder's profit margin on sales for each of the four quarters of 2020 under both the integral and discrete approaches. Profit margin on sales 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Integral approach % % % % Discrete approach % % % % (Please show all working)

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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Sarasota, Inc. is a company that manufactures and sells a single product. Unit sales for each of the four quarters of 2020 are projected as follows.

Quarter		Units
First		64,000
Second		120,000
Third		440,000
Fourth		96,000
Annual total		720,000

Sarasota incurs variable manufacturing costs of $0.40 per unit and variable nonmanufacturing costs of $0.35 per unit. Sarasota will incur fixed manufacturing costs of $576,000 and fixed nonmanufacturing costs of $864,000. Sarasota will sell its product for $4 per unit.

1. Determine the amount of net income Sarasota will report in each of the four quarters of 2020, assuming actual sales are as projected and employing the integral approach to interim financial reporting. (Ignore income taxes.) Repeat the analysis under the discrete approach. (Round answers to 0 decimal places)

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Net income (Integral Approach)
Net income (Discrete Approach)

2. Compute Flounder's profit margin on sales for each of the four quarters of 2020 under both the integral and discrete approaches.

	Profit margin on sales
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Integral approach	%	%	%	%
Discrete approach	%	%	%	%

(Please show all working)

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