A company's master budget for October is to manufacture and sell 30,000 units for a total sales revenue of $270,000, total variable costs of $180,000, and total fixed costs of $24,000. The company actually manufactured and sold 32,000 units and generated $45,000 of operating income in October. The flexible-budget operating income in October was:

Answer:

$72,000

Explanation:

The Starting point for flexing a Budget  is to determine the Standard unit Selling Price and unit Cost Prices, then apply the amounts to the actual activity/production as shown below ;

Flexible-budget for the month of October

Sales ($270,000/30,000 x  32,000)                               $288,000

Less Variable Costs ($180,000/30,000 x  32,000)       ($192,000)

Contribution                                                                        $96,000

Less Fixed Costs                                                               ($24,000)

Operating Income                                                               $72,000

Extended warranties

Carnes Electronics sells consumer electronics that carry a 90-day manufacturer’s warranty. At the time of purchase, customers are offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes received $412,000 for these extended warranties (approximately evenly throughout the year).

Required:

1.Does this situation represent a loss contingency? Why or why not? How should it be accounted for?

2.Prepare journal entries that summarize sales of the extended warranties (assume all credit sales) and any aspects of the warranty that should be recorded during the year.

Duffy-Deno (2003) estimated that the demand function for broadband service was Qs = 15.6p−0.563 for small firms and Ql = 16.0p−0.296 for larger ones. These two demand functions cross. What can you say about the elasticities of demand on the two demand curves at the point where they cross? What can you say about the elasticities of demand more generally (at other prices)? (Hint: The question about the crossing point may be a red herring. Explain why.)

Why did Steve and Vic focused on smaller cities rather than Silicon Valley

OHARA COMPANY
Income Statement
For the Year Ended December 31, 2017
Net sales $2,218,500
Cost of goods sold 1,012,400
Selling and administrative expenses 906,000
Interest expense 78,000
Income tax expense 69,000
Net income $ 153,100
OHARA COMPANY
Balance Sheet
December 31, 2017
Assets
Current assets
Cash $ 60,100
Debt investments 84,000
Accounts receivable (net) 169,800
Inventory 145,000
Total current assets 458,900
Plant assets (net) 575,300
Total assets $ 1,034,200
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $ 160,000
Income taxes payable 35,500
Total current liabilities 195,500
Bonds payable 200,000
Total liabilities 395,500
Stockholders’ equity
Common stock 350,000
Retained earnings 288,700
Total stockholders’ equity 638,700
Total liabilities and stockholders’ equity
$1,034,200



Additional information: The net cash provided by operating activities for 2017 was $190,800. The cash used for capital expenditures was $92,000. The cash used for dividends was $31,000. The weighted-average number of shares outstanding during the year was 50,000.

(i) Working capital. (2016: $160,500; 2017: $263,400)
(ii) Current ratio. (2016: 1.65:1; 2017: 2.35:1)
(iii) Free cash flow. (2016: $48,700; 2017: 67,800)
(iv) Debt to assets ratio. (2016: 31%; 2017: 38.2%)
(v) Earnings per share. (2016: $3.15; 2017: $3.06)