The management of Furrow Corporation is considering dropping product L07E. Data from the company's budget for the upcoming year appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $186,000 of the fixed manufacturing expenses and $106,000 of the fixed selling and administrative expenses are avoidable if product LO7E is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be: Multiple Choice с $173,000 ($8,000) ($173,000) $830,000 $365,000 $ 291,000 $ 166,000 $8,000

The management of Furrow Corporation is considering dropping product L07E. Data from the company's budget for the upcoming year appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $186,000 of the fixed manufacturing expenses and $106,000 of the fixed selling and administrative expenses are avoidable if product LO7E is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be: Multiple Choice с $173,000 ($8,000) ($173,000) $830,000 $365,000 $ 291,000 $ 166,000 $8,000

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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The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $179,000 of the fixed manufacturing expenses and $155,200 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Net operating income (loss) would $ 745,000 $ 387,000 $ 253,400 $216,200 decline increase by if product B90D were dropped. Therefore, the product dropped
Accounting Question
Bruce Company recently reduced its advertising budget. All other costs and revenues were unchanged. Select the response that Indicates the impact of the advertising cuts on the company's break-even point and margin of safety. Break-even Point Increase Decrease A) B) (C) Increase D) Decrease Multiple Choice O B. Margin of Safety Increase Decrease Decrease Increase
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Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether. Data from the company's budget for the upcoming year appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses $ 730,000 $ 350,000 $ 234,000 $ 161,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be: Multiple Choice о $15,000 О ($15,000) ($143,000) О $143,000
After you prepared the operating budget for the first quarter, Lockden learned that one of the two molding machines used by the company needs a major overhaul soon. Since the company is considering cost reduction strategies in response to the economic uncertainty, this news was unfavorable. But Lockden realized that the overhaul is important and has decided to do the overhaul during the first quarter of 2020. The overhaul will cost US$100,000,7 and the machine will not be operational during the overhaul (i.e., the entire duration of the first quarter). The company is exploring the viability of the following options to handle this operational challenge: Option 1: Lockitt, Inc. will run the functional molding machine two shifts per day, instead of one. Since LB075 labor is paid hourly, this proposal will not change the labor hours required. But the company must pay a higher wage rate to the employees in the second shift, causing the average LB075 rate to increase to $45 per hour.…
Members of the board of directors of Safety Place have received the following operating income data for the year ended May 31, 2018: (Click the icon to view the operating income data.) Members of the board are surprised that the industrial systems product line is not profitable. They commission a study to determine whether the company should drop the line. Company accountants estimate that dropping industrial systems will decrease fixed cost of goods sold by $80,000 and decrease fixed selling and administrative expenses by $10,000. Read the requirements. Requirement 1. Prepare a differential analysis to show whether Safety Place should drop the industrial systems product line. (Use parentheses or a minus sign to enter decreases to profits.) in operating income
The salespeople at Larkspur, a notebook manufacturer, commonly pressured operations managers to keep costs down so the company could give bigger discounts to large customers. David, the operations supervisor, leaked the $0.80 total unit cost to salespeople, who were thrilled, since that was slightly lower than the previous year's unit cost. Budgets were not yet finalized for the upcoming year, so it was unclear what the target unit cost would be. David knew the current year's operating capacity was two million notebooks, and Larkspur produced and sold just that many. The detailed breakdown of the $0.80 total unit cost is as follows. Direct material Direct labor Variable overhead Fixed overhead Total cost per unit $0.05 0.20 0.15 0.40 $0.80
What is a good response to? The FASB has outlined a specific way to deal with costs that affect more than one accounting period. The primary location for this outline can be found in ASC 270 - Interim Reporting. One example is pre-paid expenses, such as prepaid rent or prepaid insurance. Normally, a company will pay the entire year of insurance in one lump sum. However, this payment will be in "effect" for the entire year so it must be allocated over the 12 months. The FASB outlines that these costs should be allocated appropriately to the report prepared. ASC 270-10-45-13 Next is depreciation. This method of expensing assets over a certain lifetime will require spreading that cost over each month for the entire life of the asset. For this, it should be recorded evenly over each interim period. ASC 270-10-45-14 Finally, amortization of intangible assets. This applies towards assets like trademarks or patents. They are recognized annually, divided by the useful life. The…
Leslie Company operates a cafeteria for the benefit of its employees. The company subsidizes the cafeteria heavily by allowing employees to purchase meals at greatly reduced prices. Budgeted and actual costs in the cafeteria for the year just ended are as follows: Variable costs* Fixed costs Budgeted Actual $933,165 $777,240 $366,000 $391,000 "Unrecovered cost after deducting amounts received from employees. Costs of the cafeteria are charged to producing departments on the basis of the number of employees in these departments. Fixed costs are charged on the basis of the percentage of peak-period requirements. Data concerning the company's producing departments follows: Budgeted number of employees Actual number of employees Percentage of peak-period requirements Machining 465 270 Amounts to be charged Machining Variable cost Fixed cost 40% Complete this question by entering your answers in the tabs below. Required A Required: a. Compute the dollar amount of variable and fixed costs…