The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses Shipping expense Advertising expense Salaries & commissions Insurance expense Depreciation expense Total operating expenses Net income Central Valley Company Comparative Monthly Income Statements March COGS Shipping Salaries and commissions 5,900 $755,200 386,400 368,800 Y Y Y 68,800 79,000 April 5,400 $691,200 $787,200 359,400 394,900 331,800 392,300 64,300 79,000 157,300 9,900 48,000 358,500 May 6,150 71,800 79,000 174, 100 174,800 9,900 9,900 48,000 48,000 379,800 383,500 $(11,000) $(26,700) $8,800 X X X June 6,800 $870,400 435,000 435,400 Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. 75,500 79,000 189,500 9,900 48,000 401,900 $33,500 4

The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below. Sales in units Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses Shipping expense Advertising expense Salaries & commissions Insurance expense Depreciation expense Total operating expenses Net income Central Valley Company Comparative Monthly Income Statements March COGS Shipping Salaries and commissions 5,900 $755,200 386,400 368,800 Y Y Y 68,800 79,000 April 5,400 $691,200 $787,200 359,400 394,900 331,800 392,300 64,300 79,000 157,300 9,900 48,000 358,500 May 6,150 71,800 79,000 174, 100 174,800 9,900 9,900 48,000 48,000 379,800 383,500 $(11,000) $(26,700) $8,800 X X X June 6,800 $870,400 435,000 435,400 Required: 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. 75,500 79,000 189,500 9,900 48,000 401,900 $33,500 4

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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