The Mansfield Company manufactures and sells two lines of fishing rods. During the most recent accounting period, the Pro line and the Novice line sold 15,800 and 2,800 units, respectively. The company's most recent financial statements are shown below: Sales Less cost of goods sold: Pro $948,000 Novice $336,000 Unit-level production cost 632,000 189,000 Depreciation, production equipment 137,000 70,000 Gross margin $179,000 $77,000 Less operating expenses: Unit-level selling and administrative costs Corporate-level facility expenses (fixed) 42,000 91,000 37,920 37,920 Net income (loss) $99,080 $(51,920) Based on this information, the company should:
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- The Mansfield Company manufactures and sells two lines of fishing rods. During the most recent accounting period, the Pro line and the Novice line sold 15,000 and 2,000 units, respectively. The company's most recent financial statements are shown below: Pro Novice Sales $900,000 $240,000 Less cost of goods sold: Unit-level production cost 600,000 135,000 Depreciation, production equipment 125,000 50,000 Gross margin $175,000 $55,000 Less operating expenses: Unit-level selling and administrative costs 40,000 65,000 Corporate-level facility expenses (fixed) 36,000 36,000 Net income (loss) $99,000 $46,000 Based on the information given, should the company keep or eliminate the Novice line? IF kept how much does it contribute in total profitability?The Mansfield Company manufactures and sells two lines of fishing rods. During the most recent accounting period, the Pro line and the Novice line sold 16,600 and 3,600 units, respectively. The company's most recent financial statements are shown below: Sales Less cost of goods sold: Unit-level production cost Depreciation, production equipment Gross margin Less operating expenses: Unit-level selling and administrative costs Corporate-level facility expenses (fixed) Net income (loss) Based on this information, the company should: Multiple Choice It is impossible to determine with the given information. Pro $996,000 664,000 149,000 $183,000 Keep the Novice line because it contributes $99,000 to total profitability. Eliminate the Novice line because it is operating at a loss. 44,000 39,840 $99,160 Keep the Novice line because it contributes $72,000 to total profitability. Novice $432,000 243,000 90,000 $99,000 117,000 39,840 $(57,840)Hancock Company manufactures and sells two lines of furniture, case goods and upholstery. During the most recent accounting period, the Case Goods and Upholstery Divisions sold 15,600 and 2,090 units, respectively. The company's most recent financial statements are shown below: (Do not round intermediate calculations.) Case Goods Upholstery Sales $1,663,000 $418,000 Less cost of goods sold: Unit-level production cost 1,039,000 250,800 Depreciation, production equipment Gross margin 249,000 62,700 $ 375,000 $104,500 Less operating expenses: Unit-level selling and administrative costs 62,400 52,250 Corporate-level facility expenses (fixed) 55,000 55,000 Net income (loss) $ 257,600 $ (2,750) If unit sales for both divisions increased 10%, the company would report which of the following? Multiple Choice A $55,000 increase in net income for the Upholstery Division A 10% increase in total net income of the company A decline in profit for the Upholstery Division A net income for the…
- Hancock Company manufactures and sells two lines of furniture, case goods and upholstery, During the most recent accounting period, the Case Goods and Upholstery Divisions sold 17,400 and 2,360 units, respectively. The company's most recent financial statements are shown below. Sales Less cost of goods sold: Unit-level production cost Depreciation, production equipment Gross margin Less operating expenses: Case Goods Upholstery $1,852,000 $472,000 1,156,000 276,000 $420,000 283,200 70,800 $118,000 Unit-level selling and administrative costs Corporate-level facility expenses (fixed) Net income (loss) If unit sales for both divisions increased 10% the company would report which of the following? 69,600 64,000 $286,400 59,000 64,000 $(5,000)Coyle Manufacturing reports the following information for year 1: Sales revenue (50,000 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total costs Operating profits (losses) $ 5,130,000 $ 302,000 256,000 590,000 1,800,000 760,000 269,000 916,000 134,000 $ 5,027,000 $ 103,000 All depreciation charges are fixed. Manufacturing depreciation is expected to increase by 10 percent in year 2. Marketing and administrative depreciation are expected to remain the same for year 2. Sales volume is expected to increase by 5 percent, but prices are expected to fall by 10 percent. Materials costs per unit are expected to decrease by 8 percent. Unit variable cash manufacturing costs are expected to increase by 15 percent. Fixed cash costs are expected to increase by 6 percent. Variable marketing costs will change…Menlo Company manufactures and sells a single product. The following information has been provided to you: Profit and loss account for the year ended 31 Dec 2017: £ £ £ Sales 3,000,000 Production costs: Direct materials 300,000 Direct labour 1,387,500 Variable overhead 150,000 Fixed overhead 525,000 Total production costs: 2,362,500 Fixed administration overhead 240,000 Selling and distribution costs: Sales commission (2% of sales) 60,000 Variable distribution costs 127,500 Fixed advertising costs 90,000 277,500 2,880,000 Profit 120,000…
- Menlo Company manufactures and sells a single product. The following information has been provided to you: Profit and loss account for the year ended 31 Dec 2017: £ £ £ Sales 3,000,000 Production costs: Direct materials 300,000 Direct labour 1,387,500 Variable overhead 150,000 Fixed overhead 525,000 Total production costs: 2,362,500 Fixed administration overhead 240,000 Selling and distribution costs: Sales commission (2% of sales) 60,000 Variable distribution costs 127,500 Fixed advertising costs 90,000 277,500 2,880,000 Profit 120,000…Whitman Company has just completed its fi rst year of operations. The company’s absorption costing income statement for the year appears below: Whiteman CompanyIncome Statement Sales (35000 units)Rs.875,000 Cost of goods sold @ of Rs.16 per unit560,000 Gross Profit315,000 Selling and Administrative expenses280,000 Net operating income35,000 The company’s selling and administrative expenses consist of Rs.210,000 per year in fixed expenses and Rs.2 per unit sold in variable expenses. The Rs.16 per unit product cost given above is computed as follows:Direct MaterialsRs.5 Direct Labour6 Variable manufacturing overhead1 Fixed manufacturing overhead (Rs.160,000 ÷ 40,000 units)4 Absorption costing unit product cost16 Required: Redo the company’s income statement in the contribution format using variable costing. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement…The following information relates to the Magna Company for the upcoming year, based on 490,000 units. Amount Per Unit Sales $ 4,900,000 $ 10.00 Cost of goods sold 3,920,000 8.00 Gross margin 980,000 2.00 Operating expenses 367,500 0.75 Operating profits $ 612,500 $ 1.25 The cost of goods sold includes $1,470,000 of fixed manufacturing overhead; the operating expenses include $122,500 of fixed marketing expenses. A special order offering to buy 86,000 units for $9.30 per unit has been made to Magna. Fortunately, there will be no additional fixed expenses associated with the order and Magna has sufficient capacity to handle the order. How much will operating profits be increased if Magna accepts the special order?
- Please Correct answer With ExplanationThe Harding Company manufactures skates. The company’s income statement for 20X1 is as follows: HARDING COMPANY Income Statement For the Year Ended December 31, 20X1 Sales (10,400 skates @ $58 each) $ 603,200 Variable costs (10,400 skates at $24) 249,600 Fixed costs 190,000 Earnings before interest and taxes (EBIT) $ 163,600 Interest expense 62,000 Earnings before taxes (EBT) $ 101,600 Income tax expense (20%) 20,320 Earnings after taxes (EAT) $ 81,280 a. Compute the degree of operating leverage. (Round your answer to 2 decimal places.) b. Compute the degree of financial leverage. (Round your answer to 2 decimal places.) c. Compute the degree of combined leverage. (Round your answer to 2 decimal places.) d. Compute the break-even point in units (number of skates). (Round your answer to the nearest whole number.)ABC Manufacturing produces metal lampposts. The company's income statements for the last two years are given below. The company has no beginning or ending inventories. Last Year This YearUnits sold. 60,000 85,000Sales. 1,440,000. 2,040,000Less cost of goods sold. 785,000 1,060,000 Gross margin 655,000 980,000Less operating expenses. 237,000 312,000Net income 418,000. 668,000Using the high/low method, determine the company's total variable cost per unit.