tax incom Gross profit ? Allocated costs (uncontrollable) $2,030 Labor expense 41,590 Sales 189,000 Research and development (uncontrollable) 320 Depreciation expense 18,000 Net income/(loss) ? Cost of goods sold 119,070 Selling expense 1,250 Total expenses ? Marketing costs (uncontrollable) 780 Administrative expense 700 Income tax expense (21% of pretax income) ?

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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values.

Pretax income ?
Gross profit ?
Allocated costs (uncontrollable) $2,030
Labor expense 41,590
Sales 189,000
Research and development (uncontrollable) 320
Depreciation expense 18,000
Net income/(loss) ?
Cost of goods sold 119,070
Selling expense 1,250
Total expenses ?
Marketing costs (uncontrollable) 780
Administrative expense 700
Income tax expense (21% of pretax income) ?
Other expenses 310

A. Prepare the income statement to include all costs, but separate out uncontrollable costs using the above information. Round your answers to the nearest dollar.

BDS Enterprises
Income Statement
For the Year Ended December 31, 20xx
  $fill in the blank d5aab6fb1fdef99_2
  fill in the blank d5aab6fb1fdef99_4
  $fill in the blank d5aab6fb1fdef99_6
Controllable Expenses:  
  $fill in the blank d5aab6fb1fdef99_8
  fill in the blank d5aab6fb1fdef99_10
  fill in the blank d5aab6fb1fdef99_12
  fill in the blank d5aab6fb1fdef99_14
  fill in the blank d5aab6fb1fdef99_16
Total Controllable Expenses $fill in the blank d5aab6fb1fdef99_17
Uncontrollable Expenses:  
  $fill in the blank d5aab6fb1fdef99_19
  fill in the blank d5aab6fb1fdef99_21
  fill in the blank d5aab6fb1fdef99_23
Total Uncontrollable Expenses $fill in the blank d5aab6fb1fdef99_24
Total Expenses $fill in the blank d5aab6fb1fdef99_25
  $fill in the blank d5aab6fb1fdef99_27
  fill in the blank d5aab6fb1fdef99_29
  $fill in the blank d5aab6fb1fdef99_31

B. Calculate the profit margin, return on investment, and residual income, excluding uncontrollable expenses. Assume an investment base of $100,000 and 4% cost of capital. Round your percentage answers to one decimal place and residual income to the nearest dollar.

Profit margin fill in the blank 784c37077068fd9_1 %
Return on investment fill in the blank 784c37077068fd9_2 %
Residual income $fill in the blank 784c37077068fd9_3  

C. Which of the following statements is correct? Uncontrollable costs are included in the income statement because

a. these costs ultimately affect each division.
b. these costs are the responsibility of each division manager.
c. these costs are non-recurring.
d. these costs are head office's responsibility.

 

 

Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to
prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the
values.
Pretax income
?
Gross profit
?
Allocated costs (uncontrollable)
$2,030
Labor expense
41,590
Sales
189,000
Research and development (uncontrollable)
320
Depreciation expense
18,000
Net income/(loss)
?
Cost of goods sold
119,070
Selling expense
1,250
Total expenses
?
Marketing costs (uncontrollable)
780
Administrative expense
700
Income tax expense (21% of pretax income)
?
Other expenses
310
Transcribed Image Text:Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. Pretax income ? Gross profit ? Allocated costs (uncontrollable) $2,030 Labor expense 41,590 Sales 189,000 Research and development (uncontrollable) 320 Depreciation expense 18,000 Net income/(loss) ? Cost of goods sold 119,070 Selling expense 1,250 Total expenses ? Marketing costs (uncontrollable) 780 Administrative expense 700 Income tax expense (21% of pretax income) ? Other expenses 310
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