The Ski department reports sales of $625,000 and cost of goods sold of $437,500. Its expenses follow.Direct Expenses Indirect Expenses Service Department Expenses Salaries$118,000Rent$16,100Office$24,200Depreciations44,600 Req 1Req 2 and 3For the Ski department only, prepare a departmental income statement.Departmental Income StatementFor Year Ended December 31Ski DepartmentExpensesTotal expenses$ Req 1Req 2 and 3For the Ski department only, prepare a departmental contribution to overhead report. Based on these two reports, should theSki department be eliminated?Departmental Contribution to OverheadFor Year Ended December 31Ski DepartmentTotal direct expensesDepartmental contribution to overheadShould the Ski department be eliminated?Req 2 and 3 >YesNo%24

Departmental Income Statement: It is a sort of income statement that displays the contribution…

The Ski department reports sales of $625,000 and cost of goods sold of $437,500. Its expenses follow. Direct Expenses Indirect Expenses Service Department Expenses Salaries $118,000 Rent $16,100 Office $24,200 Depreciations 44,600

The Ski department reports sales of $625,000 and cost of goods sold of $437,500. Its expenses follow. Direct Expenses Indirect Expenses Service Department Expenses Salaries $118,000 Rent $16,100 Office $24,200 Depreciations 44,600

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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Outdoor World, Inc., manufactures camping equipment. Shown for the current year are the income statement for the company and a common size summary for the industry in which the company operates. Outdoor World, Inc. Industry Average Sales (net) $ 20,000,000 100 % Cost of goods sold 9,800,000 58 Gross profit on sales $10,200,000 42 % Operating expenses: Selling $ 4,200,000 16 % General and administrative 3,400,000 20 Total operating expenses $7,600,000 36 % Operating income $ 2,600,000 6 % Income tax expense 1,200,000 3 Net income $1,400,000 3 % Return on assets 23 % 14% Required: a. Prepare a common size income statement. The first column should show for Outdoor World, Inc., all items expressed as a percentage of net sales. The second column has been completed and shows the equivalent industry average for the data given in the problem. The purpose of this common size statement is to compare the operating results of Outdoor World, Inc., with the average for the industry. b. If results of…
Larned Corporation recorded the following transactions for the just completed month. Purchased $89,000 of raw materials on account. $87,000 in raw materials were used in production. Of this amount, $74, 000 was direct materials and the remainder was indirect materials. Paid employees $127,500 cash. Of this amount, $104, 400 was direct labor and the remainder was indirect labor. Depreciation of $191,000 was incurred on factory equipment. Required: Record the above transactions in journal entries.
Assume that a manufacturing company incurred the following costs: $ 90,000 $ 40,000 $ 35,000 $ 15,000 $ 4,000 $ 5,000 $ 20,000 $ 1,000 $ 2,500 $ 105,000 $ 6,000 $ 7,000 Direct labor Advertising Factory supervision Sales commissions Depreciation, office equipment Indirect materials Depreciation, factory building Administrative office salaries Utilities, factory Direct materials Insurance, factory Property taxes, factory What is the total amount of conversion costs?
Larned Corporation recorded the following transactions for the just completed month. Purchased $73, 000 of raw materials on account. $71,000 in raw materials were used in production. Of this amount, $58,000 was direct materials and the remainder was indirect materials. Paid employees $130,000 cash. Of this amount, $102, 400 was direct labor and the remainder was indirect labor. Depreciation of $191,000 was incurred on factory equipment. Required: Record the above transactions in journal entries. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two operating departments using different allocation bases. The following information is available for the current period: Office Expenses Total Allocation Base Salaries $ 30,000 Number of employees Depreciation 20,000 Cost of goods sold Advertising 40,000 Percentage of total sales Department Number of employees Sales Cost of goods sold Drilling 1,000 $ 325,000 $ 75,000 Grinding 1,500 475,000 125,000 Total 2,500 $ 800,000 $ 200,000 The amount of salaries that should be allocated to Grinding for the current period is:
During its first year of operations, Corvallis Company incurred the following costs: direct materials - $15,000$15,000; production workers wages - $25,000$25,000; sales commission - $12,000$12,000; advertising - $2,500$2,500; rent on the manufacturing plant - $11,000$11,000; depreciation of plant equipment - $9,000$9,000. The company produced 12,00012,000 units and of these sold 8,0008,000. What is the average production cost per unit?
DJV Corporation incurred the following costs while manufacturing its product. Materials used in product $ 120,000 Advertising expense $45,000 Depreciation on plant 60,000 Property taxes on plant 19,000 Property taxes on store 7,500 Delivery expense 21,000 Labor costs of assembly-line workers 110,000 Sales commissions 35,000 Factory supplies used 23,000 Salaries paid to sales clerks 50,000 Work-in-process inventory was $22,000 at January 1 and $15,500 at December 31. Finished goods inventory was $65,000 at January 1 and $50,600 at December 31. Instructions Compute cost of goods manufactured. Compute cost of goods sold.
Suresh Company reports the following segment (department) income results for the year. Department M Department N Department 0 Department P $ 82,000 $ 44,000 $ 78,000 $ 65,000 Sales Expenses Avoidable Unavoidable Total expenses Income (loss) Department Department M Department N Department O Department P Department T 17,300 45,400 57,800 21,600 75, 100 67,000 $ 6,900 $ (23,000) Decision 18,000 5,700 23,700 $ 54,300 21,500 54,300 75,800 $ (10,800) Department T $ 43,000 51,300 20,300 71, 600 $ (28,600) Total $ 312,000 a. If the company plans to eliminate departments that have sales less than avoidable costs, which department(s) would be eliminated? 153,500 159, 700 313, 200 $ (1,200)
Seling, general, and administrative expenses were $178,200; net sales were $810,000; interest expense was $19,400; research and development expenses were $85,050; net cash provided by operating activities was $215, 100; income tax expense was $18,160; cost of goods sold was $445,500 Required: a. Calculate operating income for the period. Operating expenses b. Calculate net income for the period. Interest expense Income tax expense
Family Services, a small social service nonprofit agency, began operations on January 1, 20X1, with $40,000 cash and $150,000 worth of equipment, on which $60,000 was owed on a note to City Bank. The equipment was expected to have a remaining useful life of 15 years with no salvage value. During its first year of operations, ending December 31, 20X1, Family Services paid or accrued the following: A. Salaries and other personnel costs, $100,000 B. Rent and utilities, $24,000. C. Debt service: interest, $5,500, and payment on long-term note principal, $10,000 D. Capital outlay: additional equipment purchased January 3, $30,000, expected to last 6 years and have a $6,000 salvage value. E. Other current operating items paid with cash, $4,500. There were no prepayals or unrecorded accruals at December 31, 20X1, and no additional debt was incurred during the year. Required Compute for the Family Services agency, for the year ended December 31,…
Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period: Office Expenses Total Allocation Basis Salaries $40,000 Number of employees Depreciation Advertising 26,000 Cost of goods sold 60,000 Net sales Item Drilling Grinding Total Number of employees 1,800 2,700 4,500 Net sales $352,000 $528,000 $880,000 Cost of goods sold $110,200 $179,800 $290,000 The amount of depreciation that should be allocated to Grinding for the current period is: Multiple Choice $37,200. $26,000.
Presented below is the income statement of Debra, Inc.: Sales revenue $380,000 Cost of goods sold 222,000 Gross profit $158,000 Operating expenses 94,100 Income before income taxes 63,900 Income taxes 22,900 Net income $ 41,000 In addition, the following information related to net changes in working capital is presented: Debit Credit Cash $11,800 Accounts receivable 24,300 Inventories $19,700 Salaries payable (operating expenses) 8,400 Accounts payable 14,100 Income taxes payable 3,100 The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,900. Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows: (a) using the indirect method. (b) using the direct method.