Answer:
Debit Cash for $62,700; Credit Note receivable for $60,000; and Credit Interest income for $2,700.
Explanation:
The following are first determined:
Note receivable = $60,000
Interest income = Note receivable * Interest rate * (Number of months for October 1, 2013 to December. 31, 2013 / Number of months in a year) = $60,000 * 6% * (9 / 12) = $2,700
Cash = Note receivable + Interest income = $60,000 + $2,700 = $62,700
Therefore, the journal entry on the collection date, June 30, 2014 would look as follows:
Date Particulars Debit ($) Credit ($)
30 Jun '14 Cash 62,700
Note receivable 60,000
Interest income 2,700
(To record receipt of interest and principal on note.)
Transaction Recording
a. Henry Associates paid $490 on account for an earlier purchase Purchases journal .
of merchandise inventory
b. Recorded depreciation expense for the month. Cash payments journal
c. Collected interest revenue. Cash receipts journal
d. Sold merchandise inventory on account. Cash receipts journal
e. Issued check no. 535 for purchase of merchandise inventory. Purchases journal
f. Returned damaged inventory that was purchased on account. Purchases journal
g. Sold merchandise inventory for cash. Sales journal
For each transaction listed, identify the recording error and indicate the journal that should have been used.
Answer:
a. Henry Associates paid $490 on account for an earlier purchase of merchandise inventory.
Recording error ⇒ This is a cash payment and so should go to Cash Payment journal.
b. Recorded depreciation expense for the month.
Recording error ⇒ This is an expense entry for adjustment which means that it should be in the General journal.
c. Collected interest revenue. Cash receipts journal
Recording error ⇒ Correctly recorded.
d. Sold merchandise inventory on account.
Recording error ⇒ This is a sale so should go to the Sales Journal.
e. Issued check no. 535 for purchase of merchandise inventory.
Recording error ⇒ This is a payment by cash so this should go to the Cash payment journal.
f. Returned damaged inventory that was purchased on account.
Recording error ⇒ This goes to the General journal as a debit memo.
g. Sold merchandise inventory for cash.
Recording error ⇒ The Sales journal is for sales on account but this is a cash sale so it should go to the Cash sales journal.
g When ________, a competitive firm will produce and earn economic profits. Group of answer choices marginal revenue is rising marginal revenue
Answer:
marginal revenue is above average costs
Explanation:
Perfectly competitive market is the market where there are large no of buyer and sellers who sells and buys same kind of products . The Prices are decided by forces of demand and supply.
This price is equivalent to marginal revenue of one firm.
A profit maximising firm generates the quantity at the time when MR and MC curve intersect with each other. The firm could earn economic profit at the time when price pr marginal revenue is above average total cost
A machine that cost $644,000 has an estimated residual value of $28,000 and an estimated useful life of 28,000 machine hours. The company uses units-of-production depreciation and ran the machine 8,000 hours in year 1, 10,000 hours in year 2, and 7,000 hours in year 3. Calculate its book value at the end of year 3.
Answer:
94,000
Explanation:
Activity method based on output = (output produced that year / total output of the machine) x (Cost of asset - Salvage value)
( $644,000 - $28,000) / 28,000 = 22
1 = 22 x 8000 = 176,000
2= 22 x 10,000 = 220,000
3 22 x 7000 = 154,000
Book value = cost of asset - accumulated depreciation
$644,000 - (176,00 + 220,000 + 154,000)
Which of the following costs is not a component of manufacturing overhead of a bicycle manufacturer? Group of answer choices Indirect materials. Factory utilities. Bicycle wheels. Indirect labor. Property taxes on the manufacturing plant. g
Answer:
Bicycle wheels
Explanation:
The following cost should be classified as the manufacturing overhead
1. Indirect materials
2. Indirect labor
3. Factory utilities
4. Property taxes
but the bicycle wheels should not be classified as the manufacturing overhead as it the direct material that directly related to the product
Therefore the bicycle wheel should be relevant
Use the following information for Shafer Company to compute inventory turnover for year 2.
Year 2 Year 1
Net sales $657,500 $584,900
Cost of goods sold 390,500 361,040
Ending inventory 79,700 81,380
Answer:
4.85 times
Explanation:
The computation of the inventory turnover for the year 2 is shown below:
we know that
Inventory turnover = Cost of goods sold ÷ Average inventory
Here,
Average inventory is
= ($79,700 + $81,380 ÷ 2)
= $80,540
So,
The Inventory turnover is
= $390,500 ÷ $80,540
= 4.85 times
The practice of intentionally targeting borrowers in poor or underserved areas with expensive high-cost loans is known as:
Answer:
Reverse redlining
Explanation:
Reverse redlining means the practice that target the neighborhood specially the non-white for the greater prices or lended the non-fair terms like lending used for predatory with respect to the subprime mortgage
So as per the given situation, it is the reverse redlining as it is targetted to the borrowers or the areas having high cost loans
So, the same should be considered
Journalize the entries to correct the following errors: a. A purchase of supplies for $115 on account was recorded and posted as a debit to Supplies for $482 and as a credit to Accounts Receivable for $482. (Record the entry to reverse the error first.) If an amount box does not require an entry, leave it blank.
Answer:
Dr Account Receivable $482
Cr Supplies $482
Dr Supplies $115
Cr Account Receivable $155
Explanation:
Preparation of the journal entries to Record the entry to reverse the error first.
Dr Account Receivable $482
Cr Supplies $482
Dr Supplies $115
Cr Account Receivable $155
(To Record the entry to reverse the error first)
Net sales $ 229,234 $ 215,639 Cost of sales 141,048 131,376 Research and development expenses 11,581 10,045 Selling, general, and administrative expenses 15,261 14,194 Operating income ? ? Other income, net ? 1,348 Provision for income taxes 15,738 ? Net income $ 48,351 $ 45,687
Answer:
Net sales $ 229,234 $ 215,639
Cost of sales 141,048 131,376
Research and development expenses 11,581 10,045
Selling, general, and administrative expenses 15,261 14,194
Operating income 61,344 60,024
Other income, net 2,745 1,348
Provision for income taxes 15,738 15,685
Net income $ 48,351 $ 45,687
Explanation:
a) Data and Calculations:
Net sales $ 229,234 $ 215,639
Cost of sales 141,048 131,376
Research and development expenses 11,581 10,045
Selling, general, and administrative expenses 15,261 14,194
Operating income ? ?
Other income, net ? 1,348
Provision for income taxes 15,738 ?
Net income $ 48,351 $ 45,687
Operating income = Net sales minus (Cost of sales + R&D expenses, + Selling, general, and administrative expenses)
Other income, net = Net income + Provision for income taxes - Operating income
Provision for income taxes = Operating income + Other income - Net income
McCarthy Industries has two sales territories-East and West. Financial information for the two territories is presented below: East West Sales $980,000 $750,000 Direct costs: Variable (343,000) (225,000) Fixed (450,000) (325,000) Allocated common costs (275,000) (175,000) Net income (loss) $(88,000) $25,000 Because the company is in a start-up stage, corporate management feels that the East sales territory is creating too much of a cash drain on the company and it should be eliminated. If the East territory is discontinued, one sales manager (whose salary is $40,000 per year) will be relocated to the West territory. By how much would McCarthy's income change if the East territory is eliminated
Answer:
Decrease in income by $227,000
Explanation:
The computation of the amount of the change in the income in the case when the east territory is eliminated is shown below;
= -Sales + Direct cost + fixed cost - salary per year
= -$980,000 + $343,000 + ($450,000 - $40,000)
= -$980,000 + $343,000 + $410,000
= -$227,000
Hence, the amount of the change in the income in the case when the east territory is eliminated is -$227,000
Decrease in income by $227,000
In the absence of international trade in MP3 players, what will be the price of MP3 players in the United States
Answer:
$60
Explanation:
here is the complete question
Suppose the domestic supply(Qs) and demand(Qd) for MP3 players in the UNited States are given by the following set of equations.
Qs= -25 + 10p
Qd= 875 -5p
In the absence of international trade in MP3 players, what will be the price of MP3 players in the United States
In the absence of international trade, it is assumed that quantity demanded equals quantity supplied
Qs = Qd
-25 + 10p = 875 - 5p
combine like terms
+10p + 5p = 875 + 25
15p = 900
p = 900 / 15
p = $60
In preparation for developing its statement of cash flows for the year ended December 31, 2018, Millennium Solutions, Inc. collected the following information:
Payment for the early extinguishment of long-term notes (book value: $100 million) $108.1
Sale of common shares 352.1
Retirement of common shares 244.1
Loss on sale of equipment 4.1
Proceeds from sale of equipment 16.1
Issuance of short-term note payable for cash 20.1
Acquisition of building for cash 14.1
Purchase of marketable securities (not a cash equivalent) 10.1
Purchase of marketable securities (considered a cash equivalent) 2.1
Cash payment for 3-year insurance policy 6.1
Collection of note receivable with interest (principal amount, $22) 26.1
Declaration of cash dividends 66.1
Distribution of cash dividends declared in 2020 60.1
Required:
a. Prepare the investing activities section of Millennium's statement of cash flows for 2018.
b. Prepare the financing activities section of Millennium's statement of cash flows for 2018.
Answer and Explanation:
The preparation of the investing and the financing activities is presented below:
1) Investing activities
Proceeds from the sale of equipment 16
Purchase of building -14
Purchase of marketable securities -10
Collection of notes receivable 26
Net cash flow from investing activities 18
2) Financing activities
Payment of long term notes -108
Sales of common share 352
Retirement of shares -244
Issue short term notes payable 20
Dividend paid -60
Net cash flow from financing activities -40
explain by means of a graph how Government can intervene in the market using subsidies as a means to increase output
Answer: See explanation
Explanation:
Subsidy refers to the amount of money which is given by the government to firms in order to increase production. Subsidy serves two main purpose which are to reduce price and to increase output.
Based on the diagram attached, the subsidy led to an increase in the supply of the good from S to S+ while the quantity of goods increased from Q to Q1.
Mandy, an Adlerian group leader is helping group members to realize they have choices in their lives about which stimuli they pay attention to and remember. Mandy is employing which techniques?
Answer:
Push button
Explanation:
Organisms respond to stimuli in order to survive in their given environment. It is the ability to adjust to different environmental factors that are beneficial or detrimental.
For example a worm reflexively crawls towards moisture or a dog salivating when it perceives food.
Push button shows a person that they have choices in their lives about which stimuli they pay attention to and remember.
Normally, a buyer has the right to inspect the goods _____.
Answer:
Its true....the statement is true
Anole Company was incorporated as a new business on January 1, 2015. The company is authorized to issue 20,000 shares of $5 par value common stock and 10,000 shares of 6%, $10 par value, cumulative, participating preferred stock. On January 1, 2015, the company issued 8,000 shares of common stock for $15 per share and 2,000 shares of preferred stock for $30 per share. Net income for the year ended December 31, 2015, was $375,000.
1. Refer to the information about Anole Company.
The amount of Anole’s total contributed capital at December 31, 2015, is
2. Refer to the information about Anole Company.
The number of Anole’s unissued shares of common stock at December 31, 2015, is
3. Refer to the information about Anole Company.
Anole’s total stockholders' equity reported on the balance sheet at December 31, 2015, is:___________
Answer: See explanation
Explanation:
1. The amount of Anole's total contributed capital at December 31, 2015, will be:
= (8,000 × $15) + (2,000 × $30)
= $120,000 + $60,000
= $180,000
2. The number of Anole's unissued shares of common stock at December 31, 2015, will be:
= $20,000 - $8,000
= $12,000
3. Anole's total stockholders' equity reported on the balance sheet at December 31, 2015 will be:
= (8,000 × $15) + (2,000 × $30) + $375,000
= $120,000 + $60,000 + $375,000
= $555,000
From June 2008 oil was at a high of $144.78 per barrel. During the period from April 2011 until July of 2014, the price of oil hovered between about $115.32 per barrel and about $105.22 a barrel. Then, starting in August 2014 oil began a precipitous fall in price from the $105.22 to $33.62 a barrel in January 2016. Although the U.S. has great amounts of oil that can be brought out of the ground by “fracking,” by the beginning of 2016 many of the workers in the U.S. oil exploration and drilling industry were out of work and tremendous amounts of oil exploration equipment was sitting in the equivalent of “used car lots” to be sold.
Answer:
I don't even know big cuh
Deposits other than customer payments are entered using: Multiple Choice Receive Payments Pay Bills Bank Deposit All of these choices are correct.
Answer: Bank Deposit
Explanation:
This relates to QuickBooks Online which is an accounting service that is provided to many small and medium size enterprises to help them with their accounts. It is very effective and easy to use.
When it comes to deposits other than customer payments, the relevant feature to use is the Bank deposit feature which can be found in the banking tab. You bank account can be linked to QuickBooks which would then update the your account when a bank deposit has been made.
Allied Paper Products, Inc., offers a restricted stock award plan to its vice presidents. On January 1, 2021, the company granted 15 million of its $1 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $6 per share on the grant date.
Required:
1. Determine the total compensation cost pertaining to the restricted shares.
2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2019.
Answer: See explanation
Explanation:
1. Determine the total compensation cost pertaining to the restricted shares.
This will be:
= 15 million × $6
= $90 million
2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2022.
December 31, 2021
Dr Compensation expense = 90/2 = $45 million
Cr Paid-in capital—restricted stock = $45 million
December 31, 2022
Dr Compensation expense = $45 million
Cr Paid-in capital—restricted stock = $45 million
December 31, 2022
Dr Paid-in capital—restricted stock = $90 million
Cr Common stock = $15 million
Cr Paid-in capital—excess of par = $75 million
The following selected transactions were completed during July of the current year: July 1 Billed customers for fees earned, $72,960. 4 Purchased supplies on account, $1,900. 8 Received cash from customers on account, $65,960. 11 Paid creditors on account, $840. Required: a. Journalize these transactions in a two-column journal. Refer to the list of accounts in the T accounts for exact wording of account titles. b. Post the entries prepared in (a) to the following T accounts: Cash, Supplies, Accounts Receivable, Accounts Payable, Fees Earned. To the left of each amount posted in the accounts, select the appropriate date. c. Assume that the unadjusted trial balance on July 31 shows a credit balance for Accounts Receivable. Does this credit balance mean an error has occurred
Answer:
a. Journal Entries:
July 1 Debit Accounts receivable, $72,960
Credit Fees Earned $72,960
To record fees earned.
July 4 Debit Supplies $1,900
Credit Accounts payable $1,900
To record supplies purchased on account.
July 8 Debit Cash $65,960
Credit Accounts receivable $65,960
To record cash received from customers on account.
July 11 Debit Accounts payable $840
Credit Cash $840
To record payment to creditors on account.
Cash
Date Account Titles Debit Credit
July 8 Accounts receivable $65,960
July 11 Accounts payable $840
Supplies
Date Account Titles Debit Credit
July 4 Accounts payable $1,900
Accounts Receivable
Date Account Titles Debit Credit
July 1 Fees Earned $72,960
July 8 Cash $65,960
Accounts Payable
Date Account Titles Debit Credit
July 4 Supplies $1,900
July 11 Cash $840
Fees Earned
Date Account Titles Debit Credit
July 1 Accounts receivable $72,960
c. If the unadjusted trial balance on July 31 shows a credit balance for Accounts Receivable, it means that an error has occurred, unless the cash received from customers on account exceeds the debit balance on the Accounts receivable. This will mean that some customers paid in advance for services not yet rendered. This credit balance needs to be transferred to the Deferred Revenue account.
Explanation:
a) Data and Calculations:
July 1 Accounts receivable, $72,960 Fees Earned $72,960
July 4 Supplies $1,900 Accounts payable $1,900
July 8 Cash $65,960 Accounts receivable $65,960
July 11 Accounts payable $840 Cash $840
120. Assume that the bid rate for Australian dollar $.60 [.9650] while the ask rate is $.61 [.9811] at Bank A. Also assume that the bid rate for the Australian dollar is $.62 [.9972] while the ask rate is $.625 [1.0052] at Bank B. What would be your profit if you have $100,000 and you execute locational arbitrage
Answer:
$1,639.3
Explanation:
Calculation to determine What would be your profit if you have $100,000 and you execute locational arbitrage
Profit=$100,000-($100,000/$.61)*$.62
Profit = $100,000-(A$163,934.4*$.62)
Profit = $100,000-$101,639,3.
Profit =$1,639.3
Therefore What would be your profit if you have $100,000 and you execute locational arbitrage will be $1,639.3
Entries for Bank Reconciliation The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6: Cash balance according to the company's records at August 31, $14,990. Cash balance according to the bank statement at August 31, $15,990. Checks outstanding, $3,040. Deposit in transit not recorded by bank, $2,440. A check for $270 in payment of an account was erroneously recorded in the check register as $720. Bank debit memo for service charges, $50. Journalize the entries that should be made by the company that (a) increase cash and (b) decrease cash.
Answer:
Creative Design Co.
Journal Entries:
a) increase cash:
Debit Cash $450
Credit Expenses $450
To correct an erroneously recorded check for $270 recorded as $720
b) decrease cash:
Debit Bank Service Charges $50
Credit Cash $50
To record direct bank service charges.
Explanation:
a) Data and Calculations:
Cash balance according to the company's records at August 31, $14,990.
Cash balance according to the bank statement at August 31, $15,990.
Checks outstanding, $3,040.
Deposit in transit not recorded by bank, $2,440.
A check for $270 in payment of an account was erroneously recorded in the check register as $720.
Bank debit memo for service charges, $50
Increase of cash:
Overstated check = $450 ($720 - $270)
Decrease of cash:
Bank service charges = $50
Cash Account Adjustment
Cash balance, August 31, $14,990
Overstated check = 450
Bank service charges = (50)
Adjusted cash account bal. $15,390
Bank Reconciliation Statement for the month ended August 31
Balance as adjusted cash account $15,390
Checks outstanding, $3,040
Deposit, uncredited by the bank (2,440)
Balance as per bank statement $15,990
Tammy is going on a 2-week vacation overseas. She is planning on taking two credit cards, and has notified her credit card issuers that she will be traveling with those credit cards. What should she do with her other credit cards while she is gone
Answer: Keep them safe in a deposit box
Explanation:
Since Tammy is going on a 2-week vacation overseas and she is planning on taking two credit cards, the thing to do with the other credit cards while she is gone is to keep them safe in a deposit box.
There's no need for him to cancel the cards. Also, the cards are not stolen and should not be reported stolen and he shouldn't give them to someone else in order to prevent fraud. He should keep the cards safely till he comes back.
3. How would you evaluate IMAX's international expansion to date?
Answer:
yes
Explanation:
yes
The best evaluation of the expansion of the IMAX is that there is a faster spread of the business internationally than domestically.
What is a Business Expansion?This refers to the period of growth peak when a business has to seek extra options to develop and generate more profit.
Hence, we can see that from the expansion of IMAX, there is the creation of more theatres in India as they have entered a business partnership with Inox to bring the total number of contracted theatres in India to 40
Read more about business expansion here:
https://brainly.com/question/24553900
Your manager recently gave you the responsibility of selecting the next project, which you will manage as the project manager. There are currently 3 projects on hold to choose from. Using the weighted scoring models method, you determine that Project A has a weighted score of 16, Project B has a weighted score of 14, and Project C has a weighted score of 17. Which project do you choose and why?
Answer: Project C will be chosen.
Explanation:
The weighted scoring model refers to the project management technique that is used for weighing decisions, like prioritizing project actions, purchasing new software etc.
From the weighted score of the three projects that were given, project C has the highest score of 17, therefore it should be selected.
The factors that are vital to an organization are given importance to using this method which will help the organisation achieve their aims and make decisions. Since project C has the highest weighted score, it should be chosen.
The project that should be selected is Project C.
The followings things should be considered:
If we can the weighted score so the Project C contains the maximum i.e. 17.Also, the weighted scoring method provides significant with respect to the factors that depend upon the revenue, urgency, timing, security, etc.So, if we select the project with having high weighted score so it helps the company for realizing more value comes from the project.Therefore we can conclude that the project that should be selected is Project C.
Learn more about the score here: brainly.com/question/15368298
A process with 1200 units of beginning work in process, completed and transferred out 26300 units during a period. There were 9000 units in the ending work in process that were 50% complete as to conversion costs. Materials are added 80% at the beginning of the process and 20% when the units are 90% complete with respect to conversion. How much is equivalent units of production for the period for material costs?
Answer:
Equivalent units of production = 33,500 units
Explanation:
Given:
Beginning work in progress = 1200 units
Transfer unit = 26,300 units
Ending work in progress = 9000 units (50% complete)
Find:
Equivalent units of production
Computation:
Equivalent units of production = Units transferred + Units in ending work in process
Equivalent units of production = (26,300) + (9,000 × 80%)
Equivalent units of production = (26,300) + 7,200
Equivalent units of production = 33,500 units
First National Bank charges 13.6 percent compounded monthly on its business loans. First United Bank charges 13.9 percent compounded semiannually. Calculate the EAR for First National Bank and First United Bank. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) As a potential borrower, which bank would you go to for a new loan
Answer:
First National EAR 14.48%
First United EAR 14.38%
Explanation:
Calculation to determine Calculate the EAR for First National Bank and First United Bank.
Using this formula
EAR = [1 + (APR / m)]m − 1
Let plug in the formula
First National EAR = [1 + (.136 / 12)]12 − 1
First National EAR= .1448*100
First National EAR=14.48%
First United EAR = [1 + (.139 / 2)]2 − 1
First United EAR = .1438*100
First United EAR = 14.38%
Therefore the EAR for First National Bank and First United Bank will be :
First National EAR 14.48%
First United EAR 14.38%
Lizzie Corporation has provided the following information about one of its laptop computers: Date Transaction Number of Units Cost per Unit 1/1 Beginning Inventory 280 $ 980 5/5 Purchase 380 $ 1,080 8/10 Purchase 480 $ 1,180 10/15 Purchase 290 $ 1,230 During the year, Lizzie sold 1,200 laptop computers. What was ending inventory using the FIFO cost flow assumption
Answer:
the ending inventory using the FIFO cost flow assumption is $282,900
Explanation:
The computation of the ending inventory using the FIFO cost flow assumption is shown below;
But before that first we have to determine the ending inventory units i.e.
= 280 + 380 + 480 + 290 - 1,200
= 230 units
So, the ending inventory is
= 230 units × $1,230
= $282,900
Hence, the ending inventory using the FIFO cost flow assumption is $282,900
ranson Inc. has sold product to the Brandywine Company, a major customer, for $20,000. As a courtesy to Brandywine, Branson has agreed to take a note due in two years for half of the amount due. a. What is the effective price of the transaction to Branson if the interest rate is. (1) 6%, (2) 8%, (3) 10%, or (4) 12%
Answer: See explanation
Explanation:
The effective price of the transaction to Branson based on the interest rate given will be:
1. PV = FV [PVF6,2] = $10,000(0.89) = $8,900
Therefore, $8,900 + $10,000 = $18,900
Effective Discount will be:
= (20000 - 18900) / 20000 × 100
= 1100/20000 × 100
= 0.055
= 5.5%
2) PV = FV [PVF8,2] = $10,000(0.8573) = $8,573
Therefore, $8,573 + $10,000 = $18,573
Effective Discount will be:
= (20000 - 18573)/20000 × 100
= 1427/20000 × 100
= 0.07135
= 7.135%
3) PV = FV [PVF10,2] = $10,000(0.8264) = $8,264
Therefore, $8,264 + $10,000 = $18,264
Effective Discount will be:
= (20000 - 18264)/20000 × 100
= 1736/20000 × 100
= 0.0868 × 100
= 8.68%
4) PV = FV [PVF12,2] = $10,000(0.7972) = $7,972
Therefore, $7,972 + $10,000 = $17,972
Effective Discount will be:
= (20000 - 17972)/20000 × 100
= 2028/20000 × 100
= 0.1014 × 100
= 10.14%
The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
Refer to Scenario:The change in equilibrium price will be:_______.
a. greater in the aged cheddar cheese market than in the bread market.
b. greater in the bread market than in the aged cheddar cheese market.
c. the same in the aged cheddar cheese and bread markets.
d. any of the above could be correct.
Answer:
B
Explanation:
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows:
Required:
1. Calculate the following budgeted figures for 2022:
a. The total fixed cost.
b. The variable cost per unit sold.
c. The contribution margin per unit sold.
d. The break-even point in unit sales and dollar sales.
e. The margin of safety.
f. The degree of operating leverage
2. Prepare a budgeted variable costing income statement for 2022. Stop your computations at net operating income.
Answer:
1. a. Total Fixed Cost $468,000
b. Variable cost per unit sold $1.25
c. Contribution margin per unit $10.5
d. Break even point in unit sales 44,571 units
e. Margin of Safety 10.8%
f. Degree of operating Leverage 2.3%
Explanation:
Margin of Safety : Current sales in units - Break even Sales in units
Break even Point in unit sales = Fixed cost / contribution margin
Degree of operating leverage = % change in operating leverage / % change in sales
{[667088 - 525218 ] / 667,088]} / {[55,000 - 50,000] / 55,000}
21 / 9.09 = 2.3%
Contribution Margin : Selling price per unit - Variable cost per unit
$32 - $21.5
2. Income Statement 2022
Sales 2,848,000
Cost of goods sold 1,998,732
Gross Margin 849,268
Selling and administrative cost 579,250
Operating profit 270,018
Interest Expense 9,642
Net profit 260,376