Income Statement: The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business. Contribution margin income statement: Contribution margin income statement can be defined as the income statement which explains elements like contribution margin from the sales unlike the traditional income statement. Requirement 1 To prepare: Departmental Income statement for 2017

Question

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Answer 1

Question

Chapter 24, Problem 8E

To determine

Concept Introduction:

Income Statement:

The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business.

Contribution margin income statement:

Contribution margin income statement can be defined as the income statement which explains elements like contribution margin from the sales unlike the traditional income statement.

Requirement 1

To prepare:

Departmental Income statement for 2017

Expert Solution

Answer to Problem 8E

Solution:

The departmental Income statement for 2017 –

Jansen Company
Ski Departmental Income Statement
Sales		605,000
Less: Cost of Goods sold		425,000
Gross profit		180,000
Less: Other Operating Expenses
Salaries	112,000
Utilities	14,000
Depreciation	42,000
Office expenses	20,000
Total operating expenses		188,000

Net Operating Income (or Loss)		-8,000

Explanation of Solution

The above explanation can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

• Salaries = $ 112,000

• Utilities = $ 14,000

• Depreciation = $ 42,000

• Office Expenses = $ 20,000

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} \begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n + O f f i c e E x p e n s e s \\ T o t a l O p e r a t i n g e x p e n s e s = $ 112, 000 + $ 14, 000 + $ 42, 000 + $ 20, 000 \end{array} \\ T o t a l O p e r a t i n g e x p e n s e s = $ 188, 000 \end{array}$

Net Income (or loss) –

$\begin{array}{l} \begin{array}{l} N e t I n c o m e (o r l o s s) = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ N e t I n c o m e (o r l o s s) = $ 180, 000 - $ 188, 000 \end{array} \\ N e t I n c o m e (o r l o s s) = - $ 8, 000 \end{array}$

Conclusion

Thus, the departmental income statement has been prepared.

To determine

Requirement 2

To compute:

Department Contribution to overhead report

Expert Solution

Answer to Problem 8E

Solution:

The department Contribution to overhead report = $ 40,000

Explanation of Solution

Jansen Company
Ski Departmental Contribution Income Statement
Sales		6,05,000
Less: Cost of Goods sold		4,25,000
Gross profit		1,80,000
Less: Other Operating Expenses -direct
Salaries	97,000
Utilities	11,000
Depreciation	32,000

Total direct operating expense		1,40,000

Net Contribution margin		40,000

The above contribution income statement provides net contribution of $ 40,000. The preparation of department contribution income statement can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

Only direct expenses are considered –

• Salaries = $ 97,000 (i.e. $ 97,000 as direct, as $ 15,000 is indirect)

• Utilities = $ 11,000 (i.e. $ 11,000 as direct, as $ 3,000 is indirect)

• Depreciation = $ 32,000(i.e. $ 32,000 as direct, as $ 10,000 is indirect)

• Office Expenses = $ 0 (i.e. all of the cost is indirect)

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n \\ T o t a l O p e r a t i n g e x p e n s e s = $ 97, 000 + $ 11, 000 + $ 32, 000 \\ T o t a l O p e r a t i n g e x p e n s e s = $ 140, 000 \end{array}$

Net Contribution Margin –

$\begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ \begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = $ 180, 000 - $ 140, 000 \\ N e t C o n t r i b u t i o n M a r g i n = $ 40, 000 \end{array} \end{array}$

Conclusion

Thus, the contribution of Ski to overhead report has been determined.

To determine

Requirement 3

To decide:

Should Jansen eliminate the ski department?

Expert Solution

Answer to Problem 8E

Solution:

No, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Explanation of Solution

The above answer can be explained as under –

The Ski department is giving a positive contribution to Jansen as $ 40,000. If all of the total expenses whether direct or indirect are taken together, Ski department has a net operating loss of $ 8,000 but if only direct expenses are considered, there is positive contribution of $ 40,000 to the business.

Thus, keeping in mind this fact, Jansen should not eliminate the Ski Department from the business.

Conclusion

Thus, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

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Summary: You will investigate a case of asset theft involving several fraudsters for this assignment. The case offers a chance to assess an organization's corporate governance, fraud prevention, and risk factors. Get ready: Moha Computer Services Limited Links to an external website: Finish the media activity. The scenario you need to finish the assignment is provided by this media activity. Directions: Make a four to five-page paper that covers the following topics. Management must be questioned by an auditor regarding the efficacy of internal controls and the potential for fraud. A number of warning signs point to the potential for fraud in this instance. List at least three red flags (risk factors for fraud) that apply to the Moha case. Sort them into three groups: opportunities, pressures/incentives, and (ethical) attitudes/justifications. Determine which people and organizations were impacted by Moha Computer Services Limited's enormous scam. Describe the fraud's financial and…

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Answer 2

Question

Chapter 24, Problem 8E

To determine

Concept Introduction:

Income Statement:

The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business.

Contribution margin income statement:

Contribution margin income statement can be defined as the income statement which explains elements like contribution margin from the sales unlike the traditional income statement.

Requirement 1

To prepare:

Departmental Income statement for 2017

Expert Solution

Answer to Problem 8E

Solution:

The departmental Income statement for 2017 –

Jansen Company
Ski Departmental Income Statement
Sales		605,000
Less: Cost of Goods sold		425,000
Gross profit		180,000
Less: Other Operating Expenses
Salaries	112,000
Utilities	14,000
Depreciation	42,000
Office expenses	20,000
Total operating expenses		188,000

Net Operating Income (or Loss)		-8,000

Explanation of Solution

The above explanation can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

• Salaries = $ 112,000

• Utilities = $ 14,000

• Depreciation = $ 42,000

• Office Expenses = $ 20,000

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} \begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n + O f f i c e E x p e n s e s \\ T o t a l O p e r a t i n g e x p e n s e s = $ 112, 000 + $ 14, 000 + $ 42, 000 + $ 20, 000 \end{array} \\ T o t a l O p e r a t i n g e x p e n s e s = $ 188, 000 \end{array}$

Net Income (or loss) –

$\begin{array}{l} \begin{array}{l} N e t I n c o m e (o r l o s s) = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ N e t I n c o m e (o r l o s s) = $ 180, 000 - $ 188, 000 \end{array} \\ N e t I n c o m e (o r l o s s) = - $ 8, 000 \end{array}$

Conclusion

Thus, the departmental income statement has been prepared.

To determine

Requirement 2

To compute:

Department Contribution to overhead report

Expert Solution

Answer to Problem 8E

Solution:

The department Contribution to overhead report = $ 40,000

Explanation of Solution

Jansen Company
Ski Departmental Contribution Income Statement
Sales		6,05,000
Less: Cost of Goods sold		4,25,000
Gross profit		1,80,000
Less: Other Operating Expenses -direct
Salaries	97,000
Utilities	11,000
Depreciation	32,000

Total direct operating expense		1,40,000

Net Contribution margin		40,000

The above contribution income statement provides net contribution of $ 40,000. The preparation of department contribution income statement can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

Only direct expenses are considered –

• Salaries = $ 97,000 (i.e. $ 97,000 as direct, as $ 15,000 is indirect)

• Utilities = $ 11,000 (i.e. $ 11,000 as direct, as $ 3,000 is indirect)

• Depreciation = $ 32,000(i.e. $ 32,000 as direct, as $ 10,000 is indirect)

• Office Expenses = $ 0 (i.e. all of the cost is indirect)

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n \\ T o t a l O p e r a t i n g e x p e n s e s = $ 97, 000 + $ 11, 000 + $ 32, 000 \\ T o t a l O p e r a t i n g e x p e n s e s = $ 140, 000 \end{array}$

Net Contribution Margin –

$\begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ \begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = $ 180, 000 - $ 140, 000 \\ N e t C o n t r i b u t i o n M a r g i n = $ 40, 000 \end{array} \end{array}$

Conclusion

Thus, the contribution of Ski to overhead report has been determined.

To determine

Requirement 3

To decide:

Should Jansen eliminate the ski department?

Expert Solution

Answer to Problem 8E

Solution:

No, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Explanation of Solution

The above answer can be explained as under –

The Ski department is giving a positive contribution to Jansen as $ 40,000. If all of the total expenses whether direct or indirect are taken together, Ski department has a net operating loss of $ 8,000 but if only direct expenses are considered, there is positive contribution of $ 40,000 to the business.

Thus, keeping in mind this fact, Jansen should not eliminate the Ski Department from the business.

Conclusion

Thus, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

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Answer 3

Question

Chapter 24, Problem 8E

To determine

Concept Introduction:

Income Statement:

The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business.

Contribution margin income statement:

Contribution margin income statement can be defined as the income statement which explains elements like contribution margin from the sales unlike the traditional income statement.

Requirement 1

To prepare:

Departmental Income statement for 2017

Expert Solution

Answer to Problem 8E

Solution:

The departmental Income statement for 2017 –

Jansen Company
Ski Departmental Income Statement
Sales		605,000
Less: Cost of Goods sold		425,000
Gross profit		180,000
Less: Other Operating Expenses
Salaries	112,000
Utilities	14,000
Depreciation	42,000
Office expenses	20,000
Total operating expenses		188,000

Net Operating Income (or Loss)		-8,000

Explanation of Solution

The above explanation can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

• Salaries = $ 112,000

• Utilities = $ 14,000

• Depreciation = $ 42,000

• Office Expenses = $ 20,000

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} \begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n + O f f i c e E x p e n s e s \\ T o t a l O p e r a t i n g e x p e n s e s = $ 112, 000 + $ 14, 000 + $ 42, 000 + $ 20, 000 \end{array} \\ T o t a l O p e r a t i n g e x p e n s e s = $ 188, 000 \end{array}$

Net Income (or loss) –

$\begin{array}{l} \begin{array}{l} N e t I n c o m e (o r l o s s) = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ N e t I n c o m e (o r l o s s) = $ 180, 000 - $ 188, 000 \end{array} \\ N e t I n c o m e (o r l o s s) = - $ 8, 000 \end{array}$

Conclusion

Thus, the departmental income statement has been prepared.

To determine

Requirement 2

To compute:

Department Contribution to overhead report

Expert Solution

Answer to Problem 8E

Solution:

The department Contribution to overhead report = $ 40,000

Explanation of Solution

Jansen Company
Ski Departmental Contribution Income Statement
Sales		6,05,000
Less: Cost of Goods sold		4,25,000
Gross profit		1,80,000
Less: Other Operating Expenses -direct
Salaries	97,000
Utilities	11,000
Depreciation	32,000

Total direct operating expense		1,40,000

Net Contribution margin		40,000

The above contribution income statement provides net contribution of $ 40,000. The preparation of department contribution income statement can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

Only direct expenses are considered –

• Salaries = $ 97,000 (i.e. $ 97,000 as direct, as $ 15,000 is indirect)

• Utilities = $ 11,000 (i.e. $ 11,000 as direct, as $ 3,000 is indirect)

• Depreciation = $ 32,000(i.e. $ 32,000 as direct, as $ 10,000 is indirect)

• Office Expenses = $ 0 (i.e. all of the cost is indirect)

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n \\ T o t a l O p e r a t i n g e x p e n s e s = $ 97, 000 + $ 11, 000 + $ 32, 000 \\ T o t a l O p e r a t i n g e x p e n s e s = $ 140, 000 \end{array}$

Net Contribution Margin –

$\begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ \begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = $ 180, 000 - $ 140, 000 \\ N e t C o n t r i b u t i o n M a r g i n = $ 40, 000 \end{array} \end{array}$

Conclusion

Thus, the contribution of Ski to overhead report has been determined.

To determine

Requirement 3

To decide:

Should Jansen eliminate the ski department?

Expert Solution

Answer to Problem 8E

Solution:

No, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Explanation of Solution

The above answer can be explained as under –

The Ski department is giving a positive contribution to Jansen as $ 40,000. If all of the total expenses whether direct or indirect are taken together, Ski department has a net operating loss of $ 8,000 but if only direct expenses are considered, there is positive contribution of $ 40,000 to the business.

Thus, keeping in mind this fact, Jansen should not eliminate the Ski Department from the business.

Conclusion

Thus, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

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Answer 4

Question

Chapter 24, Problem 8E

To determine

Concept Introduction:

Income Statement:

The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business.

Contribution margin income statement:

Contribution margin income statement can be defined as the income statement which explains elements like contribution margin from the sales unlike the traditional income statement.

Requirement 1

To prepare:

Departmental Income statement for 2017

Expert Solution

Answer to Problem 8E

Solution:

The departmental Income statement for 2017 –

Jansen Company
Ski Departmental Income Statement
Sales		605,000
Less: Cost of Goods sold		425,000
Gross profit		180,000
Less: Other Operating Expenses
Salaries	112,000
Utilities	14,000
Depreciation	42,000
Office expenses	20,000
Total operating expenses		188,000

Net Operating Income (or Loss)		-8,000

Explanation of Solution

The above explanation can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

• Salaries = $ 112,000

• Utilities = $ 14,000

• Depreciation = $ 42,000

• Office Expenses = $ 20,000

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} \begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n + O f f i c e E x p e n s e s \\ T o t a l O p e r a t i n g e x p e n s e s = $ 112, 000 + $ 14, 000 + $ 42, 000 + $ 20, 000 \end{array} \\ T o t a l O p e r a t i n g e x p e n s e s = $ 188, 000 \end{array}$

Net Income (or loss) –

$\begin{array}{l} \begin{array}{l} N e t I n c o m e (o r l o s s) = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ N e t I n c o m e (o r l o s s) = $ 180, 000 - $ 188, 000 \end{array} \\ N e t I n c o m e (o r l o s s) = - $ 8, 000 \end{array}$

Conclusion

Thus, the departmental income statement has been prepared.

To determine

Requirement 2

To compute:

Department Contribution to overhead report

Expert Solution

Answer to Problem 8E

Solution:

The department Contribution to overhead report = $ 40,000

Explanation of Solution

Jansen Company
Ski Departmental Contribution Income Statement
Sales		6,05,000
Less: Cost of Goods sold		4,25,000
Gross profit		1,80,000
Less: Other Operating Expenses -direct
Salaries	97,000
Utilities	11,000
Depreciation	32,000

Total direct operating expense		1,40,000

Net Contribution margin		40,000

The above contribution income statement provides net contribution of $ 40,000. The preparation of department contribution income statement can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

Only direct expenses are considered –

• Salaries = $ 97,000 (i.e. $ 97,000 as direct, as $ 15,000 is indirect)

• Utilities = $ 11,000 (i.e. $ 11,000 as direct, as $ 3,000 is indirect)

• Depreciation = $ 32,000(i.e. $ 32,000 as direct, as $ 10,000 is indirect)

• Office Expenses = $ 0 (i.e. all of the cost is indirect)

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n \\ T o t a l O p e r a t i n g e x p e n s e s = $ 97, 000 + $ 11, 000 + $ 32, 000 \\ T o t a l O p e r a t i n g e x p e n s e s = $ 140, 000 \end{array}$

Net Contribution Margin –

$\begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ \begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = $ 180, 000 - $ 140, 000 \\ N e t C o n t r i b u t i o n M a r g i n = $ 40, 000 \end{array} \end{array}$

Conclusion

Thus, the contribution of Ski to overhead report has been determined.

To determine

Requirement 3

To decide:

Should Jansen eliminate the ski department?

Expert Solution

Answer to Problem 8E

Solution:

No, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Explanation of Solution

The above answer can be explained as under –

The Ski department is giving a positive contribution to Jansen as $ 40,000. If all of the total expenses whether direct or indirect are taken together, Ski department has a net operating loss of $ 8,000 but if only direct expenses are considered, there is positive contribution of $ 40,000 to the business.

Thus, keeping in mind this fact, Jansen should not eliminate the Ski Department from the business.

Conclusion

Thus, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

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Answer 5

Chapter 24, Problem 8E

To determine

Concept Introduction:

Income Statement:

The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business.

Contribution margin income statement:

Contribution margin income statement can be defined as the income statement which explains elements like contribution margin from the sales unlike the traditional income statement.

Requirement 1

To prepare:

Departmental Income statement for 2017

Expert Solution

Answer to Problem 8E

Solution:

The departmental Income statement for 2017 –

Jansen Company
Ski Departmental Income Statement
Sales		605,000
Less: Cost of Goods sold		425,000
Gross profit		180,000
Less: Other Operating Expenses
Salaries	112,000
Utilities	14,000
Depreciation	42,000
Office expenses	20,000
Total operating expenses		188,000

Net Operating Income (or Loss)		-8,000

Explanation of Solution

The above explanation can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

• Salaries = $ 112,000

• Utilities = $ 14,000

• Depreciation = $ 42,000

• Office Expenses = $ 20,000

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} \begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n + O f f i c e E x p e n s e s \\ T o t a l O p e r a t i n g e x p e n s e s = $ 112, 000 + $ 14, 000 + $ 42, 000 + $ 20, 000 \end{array} \\ T o t a l O p e r a t i n g e x p e n s e s = $ 188, 000 \end{array}$

Net Income (or loss) –

$\begin{array}{l} \begin{array}{l} N e t I n c o m e (o r l o s s) = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ N e t I n c o m e (o r l o s s) = $ 180, 000 - $ 188, 000 \end{array} \\ N e t I n c o m e (o r l o s s) = - $ 8, 000 \end{array}$

Conclusion

Thus, the departmental income statement has been prepared.

To determine

Requirement 2

To compute:

Department Contribution to overhead report

Expert Solution

Answer to Problem 8E

Solution:

The department Contribution to overhead report = $ 40,000

Explanation of Solution

Jansen Company
Ski Departmental Contribution Income Statement
Sales		6,05,000
Less: Cost of Goods sold		4,25,000
Gross profit		1,80,000
Less: Other Operating Expenses -direct
Salaries	97,000
Utilities	11,000
Depreciation	32,000

Total direct operating expense		1,40,000

Net Contribution margin		40,000

The above contribution income statement provides net contribution of $ 40,000. The preparation of department contribution income statement can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

Only direct expenses are considered –

• Salaries = $ 97,000 (i.e. $ 97,000 as direct, as $ 15,000 is indirect)

• Utilities = $ 11,000 (i.e. $ 11,000 as direct, as $ 3,000 is indirect)

• Depreciation = $ 32,000(i.e. $ 32,000 as direct, as $ 10,000 is indirect)

• Office Expenses = $ 0 (i.e. all of the cost is indirect)

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n \\ T o t a l O p e r a t i n g e x p e n s e s = $ 97, 000 + $ 11, 000 + $ 32, 000 \\ T o t a l O p e r a t i n g e x p e n s e s = $ 140, 000 \end{array}$

Net Contribution Margin –

$\begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ \begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = $ 180, 000 - $ 140, 000 \\ N e t C o n t r i b u t i o n M a r g i n = $ 40, 000 \end{array} \end{array}$

Conclusion

Thus, the contribution of Ski to overhead report has been determined.

To determine

Requirement 3

To decide:

Should Jansen eliminate the ski department?

Expert Solution

Answer to Problem 8E

Solution:

No, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Explanation of Solution

The above answer can be explained as under –

The Ski department is giving a positive contribution to Jansen as $ 40,000. If all of the total expenses whether direct or indirect are taken together, Ski department has a net operating loss of $ 8,000 but if only direct expenses are considered, there is positive contribution of $ 40,000 to the business.

Thus, keeping in mind this fact, Jansen should not eliminate the Ski Department from the business.

Conclusion

Thus, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Answer 6

Chapter 24, Problem 8E

To determine

Concept Introduction:

Income Statement:

The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business.

Contribution margin income statement:

Contribution margin income statement can be defined as the income statement which explains elements like contribution margin from the sales unlike the traditional income statement.

Requirement 1

To prepare:

Departmental Income statement for 2017

Expert Solution

Answer to Problem 8E

Solution:

The departmental Income statement for 2017 –

Jansen Company
Ski Departmental Income Statement
Sales		605,000
Less: Cost of Goods sold		425,000
Gross profit		180,000
Less: Other Operating Expenses
Salaries	112,000
Utilities	14,000
Depreciation	42,000
Office expenses	20,000
Total operating expenses		188,000

Net Operating Income (or Loss)		-8,000

Explanation of Solution

The above explanation can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

• Salaries = $ 112,000

• Utilities = $ 14,000

• Depreciation = $ 42,000

• Office Expenses = $ 20,000

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} \begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n + O f f i c e E x p e n s e s \\ T o t a l O p e r a t i n g e x p e n s e s = $ 112, 000 + $ 14, 000 + $ 42, 000 + $ 20, 000 \end{array} \\ T o t a l O p e r a t i n g e x p e n s e s = $ 188, 000 \end{array}$

Net Income (or loss) –

$\begin{array}{l} \begin{array}{l} N e t I n c o m e (o r l o s s) = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ N e t I n c o m e (o r l o s s) = $ 180, 000 - $ 188, 000 \end{array} \\ N e t I n c o m e (o r l o s s) = - $ 8, 000 \end{array}$

Conclusion

Thus, the departmental income statement has been prepared.

Answer 7

Chapter 24, Problem 8E

To determine

Concept Introduction:

Income Statement:

The income statement can be explained as the statement giving details about the revenues, incomes, gains and expenses, losses etc. The income statement is prepared to determine net income or loss of the business by listing all the revenues, gains and expenses and losses of the business.

Contribution margin income statement:

Contribution margin income statement can be defined as the income statement which explains elements like contribution margin from the sales unlike the traditional income statement.

Requirement 1

To prepare:

Departmental Income statement for 2017

Answer 8

Expert Solution

Answer to Problem 8E

Solution:

The departmental Income statement for 2017 –

Jansen Company
Ski Departmental Income Statement
Sales		605,000
Less: Cost of Goods sold		425,000
Gross profit		180,000
Less: Other Operating Expenses
Salaries	112,000
Utilities	14,000
Depreciation	42,000
Office expenses	20,000
Total operating expenses		188,000

Net Operating Income (or Loss)		-8,000

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

The above explanation can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

• Salaries = $ 112,000

• Utilities = $ 14,000

• Depreciation = $ 42,000

• Office Expenses = $ 20,000

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} \begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n + O f f i c e E x p e n s e s \\ T o t a l O p e r a t i n g e x p e n s e s = $ 112, 000 + $ 14, 000 + $ 42, 000 + $ 20, 000 \end{array} \\ T o t a l O p e r a t i n g e x p e n s e s = $ 188, 000 \end{array}$

Net Income (or loss) –

$\begin{array}{l} \begin{array}{l} N e t I n c o m e (o r l o s s) = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ N e t I n c o m e (o r l o s s) = $ 180, 000 - $ 188, 000 \end{array} \\ N e t I n c o m e (o r l o s s) = - $ 8, 000 \end{array}$

Answer 13

Conclusion

Thus, the departmental income statement has been prepared.

Answer 14

To determine

Requirement 2

To compute:

Department Contribution to overhead report

Expert Solution

Answer to Problem 8E

Solution:

The department Contribution to overhead report = $ 40,000

Explanation of Solution

Jansen Company
Ski Departmental Contribution Income Statement
Sales		6,05,000
Less: Cost of Goods sold		4,25,000
Gross profit		1,80,000
Less: Other Operating Expenses -direct
Salaries	97,000
Utilities	11,000
Depreciation	32,000

Total direct operating expense		1,40,000

Net Contribution margin		40,000

The above contribution income statement provides net contribution of $ 40,000. The preparation of department contribution income statement can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

Only direct expenses are considered –

• Salaries = $ 97,000 (i.e. $ 97,000 as direct, as $ 15,000 is indirect)

• Utilities = $ 11,000 (i.e. $ 11,000 as direct, as $ 3,000 is indirect)

• Depreciation = $ 32,000(i.e. $ 32,000 as direct, as $ 10,000 is indirect)

• Office Expenses = $ 0 (i.e. all of the cost is indirect)

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n \\ T o t a l O p e r a t i n g e x p e n s e s = $ 97, 000 + $ 11, 000 + $ 32, 000 \\ T o t a l O p e r a t i n g e x p e n s e s = $ 140, 000 \end{array}$

Net Contribution Margin –

$\begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ \begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = $ 180, 000 - $ 140, 000 \\ N e t C o n t r i b u t i o n M a r g i n = $ 40, 000 \end{array} \end{array}$

Conclusion

Thus, the contribution of Ski to overhead report has been determined.

Answer 15

To determine

Requirement 2

To compute:

Department Contribution to overhead report

Answer 16

Expert Solution

Answer to Problem 8E

Solution:

The department Contribution to overhead report = $ 40,000

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

Jansen Company
Ski Departmental Contribution Income Statement
Sales		6,05,000
Less: Cost of Goods sold		4,25,000
Gross profit		1,80,000
Less: Other Operating Expenses -direct
Salaries	97,000
Utilities	11,000
Depreciation	32,000

Total direct operating expense		1,40,000

Net Contribution margin		40,000

The above contribution income statement provides net contribution of $ 40,000. The preparation of department contribution income statement can be explained as under –

Given,

• Sales = $ 605,000

• Cost of goods sold = $ 425,000

Only direct expenses are considered –

• Salaries = $ 97,000 (i.e. $ 97,000 as direct, as $ 15,000 is indirect)

• Utilities = $ 11,000 (i.e. $ 11,000 as direct, as $ 3,000 is indirect)

• Depreciation = $ 32,000(i.e. $ 32,000 as direct, as $ 10,000 is indirect)

• Office Expenses = $ 0 (i.e. all of the cost is indirect)

Gross profit –

$\begin{array}{l} \begin{array}{l} G r o s s p r o f i t = S a l e s - C o s t o f G o o d s s o l d \\ G r o s s p r o f i t = $ 605, 000 - $ 425, 000 \end{array} \\ G r o s s p r o f i t = $ 180, 000 \end{array}$

Total Operating expenses –

$\begin{array}{l} T o t a l O p e r a t i n g e x p e n s e s = S a l a r i e s + U t i l i t i e s + D e p r e c i a t i o n \\ T o t a l O p e r a t i n g e x p e n s e s = $ 97, 000 + $ 11, 000 + $ 32, 000 \\ T o t a l O p e r a t i n g e x p e n s e s = $ 140, 000 \end{array}$

Net Contribution Margin –

$\begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = G r o s s P r o f i t - T o t a l o p e r a t i n g e x p e n s e s \\ \begin{array}{l} N e t C o n t r i b u t i o n M a r g i n = $ 180, 000 - $ 140, 000 \\ N e t C o n t r i b u t i o n M a r g i n = $ 40, 000 \end{array} \end{array}$

Answer 21

Conclusion

Thus, the contribution of Ski to overhead report has been determined.

Answer 22

To determine

Requirement 3

To decide:

Should Jansen eliminate the ski department?

Expert Solution

Answer to Problem 8E

Solution:

No, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Explanation of Solution

The above answer can be explained as under –

The Ski department is giving a positive contribution to Jansen as $ 40,000. If all of the total expenses whether direct or indirect are taken together, Ski department has a net operating loss of $ 8,000 but if only direct expenses are considered, there is positive contribution of $ 40,000 to the business.

Thus, keeping in mind this fact, Jansen should not eliminate the Ski Department from the business.

Conclusion

Thus, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Answer 23

To determine

Requirement 3

To decide:

Should Jansen eliminate the ski department?

Answer 24

Expert Solution

Answer to Problem 8E

Solution:

No, Jansen should not eliminate the ski department as it is giving a positive contribution of $ 40,000 to the business.

Answer 25

Expert Solution

Answer 26

Expert Solution

Answer 27

Expert Solution

Answer 28

Explanation of Solution

The above answer can be explained as under –

The Ski department is giving a positive contribution to Jansen as $ 40,000. If all of the total expenses whether direct or indirect are taken together, Ski department has a net operating loss of $ 8,000 but if only direct expenses are considered, there is positive contribution of $ 40,000 to the business.

Thus, keeping in mind this fact, Jansen should not eliminate the Ski Department from the business.