Answer:
Mulberry Street Sportswear multi-step income statement for the year ended December 31.
Sales Revenue 160,400
Less Sales Returns and Allowances (18,300)
Net Sales 142,100
Less Cost of Goods Sold (87,900)
Gross Profit 54,200
Less Operating Expenses
Sales Discounts 10,800
Advertising Expense 10,200
Delivery Expense 4,300
Insurance Expense 1,400
Rent Expense 10,700 (37,400)
Operating Income 16,800
Less Non - Operating Expenses
Interest Expense 1,900
Income Tax Expense 5,960 (7,860)
Net Income / (Loss) 8,940
Explanation:
A multi-step income statement shows separately profit earned from primary activities of the company (Operating Income) from that which includes secondary activities of the Company (Net Income).
A product found in homes built before 1978 is harmful to children. It can lead to birth defects and is generally hazardous. It should only be cleaned up by specialists, and is a required disclosure for sales of real property. What environmental hazard is this?
Answer:
Asbestos
Explanation:
This environmental hazard is asbestos. Exposure to asbestos especially for a long term period is very detrimental to health. It's fibres can be easily inhaled to the lungs which is dangerous and can cause fibrotic lung disease and also lung cancer. It can lead to defects in birth when inhaled by a pregnant woman and many other health problems. During sales of property it is very important that such hazard is disclosed to the other party.
McCarthy Company has inventory... McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the FIFO perpetual inventory method, what is the value of inventory after the October 4 sale
Answer:
Ending inventory= $3,485
Explanation:
Giving the following information:
Beginning inventory= 8 units for $200 each
On October 2= purchased 20 units at $205 each.
11 units are sold on October 4.
under the FIFO (first-in, first-out) inventory method, the ending inventory is calculated using the cost of the last units incorporated into inventory.
Ending inventory= 17*205= $3,485
Suppose the wealth effect is such that a $10 change in wealth produces a $2 change in consumption at each level of income. Assume real estate prices tumble such that wealth declines by $160. Instructions: Enter your answers as whole numbers. a.What will be the new level of consumption at the $680 billion level of disposable income
Answer: $632 billion
Explanation:
The wealth effect is such that a $10 change in wealth produces a $2 change in consumption. This means that for every change in wealth, we can expect a change of;
= 2/10
= 20 % of the wealth figure in consumption.
Real Estate prices have tumbled and prices decreased by $160.
That means that consumption decreased by;
= 160 * 20%
= $32
At the $680 billion level of disposable income, Consumption was $664 billion. The new Consumption figure is therefore;
= 664 - 32
= $632 billion
identify this financial statement: which financial statement would best display a companys plant propery and equipment use in their factory everyday to help generate a slaes revenue
Answer: C) Balance Sheet
Explanation:
The Plant, Property and Equipment (PPE) that a company owns are reported in the Balance Sheet under Fixed Assets.
These Assets are considered investments because of their long term use and they help a company in generating it's sales Revenue.
They are also depreciated as well to account for the period they are in action and are usually recorded in the Balance Sheet at their Net amounts (depreciated amounts).
7. XYZ Firm recently paid $1.00 as an annual dividend. Future dividends are projected at $1.50, $2.00, $2.50, and $3.00 over the next 4 years, respectively. Beginning 5 years from now, the dividend is expected to increase by 3.0 percent annually. What is one share of this stock worth to you if you require 8 percent rate of return on similar investments
Answer:
The worth of one share is $52.72
Explanation:
The annual dividend = $1
The future dividend = $1.50, $2, $2.50, and $3
The increase in investment = 3%
Value after year 4 = (D4*Growth Rate)/(Required rate-Growth Rate)
=(3*1.03)/(0.08-0.03)
=61.8
Thus, current value (CV) = Future dividend & value × Present value of discounting factor (rate%, time period)
=1.5/1.08 + 2/1.08^2 + 2.5/1.08^3 + 3/1.08^4 + 61.8/1.08^4
=$52.72
The Internet helps consumers make well-informed decisions because of
which of the following?
O A. It speeds up the pace of both production and consumption
B. It provides the information that is crucial for making good choices
O O
O c. Private financial information can be handled more securely.
D. E-commerce makes it more convenient to purchase goods.
Answer:
B. It provides the information that is crucial for making good choices
Explanation:
The internet is mainly a worldwide network where information flows between all the participants (internet users). For this reason, the Internet has a great flow of information about consumer goods that individuals use to make well-informed purchase decisions.
Answer: The answer is B. or "It provides the information that is crucial for making good choices."
Explanation: It took the test or at least a very similar test.
Explain the provisions of section 302 of the Sarbanes-Oxley Act including obligations of officers; nature and scope of assertions; accounting requirements; and legal liability of officers.
Answer:
"Section 302 of the Sarbanes-Oxley Act states that the CEO and CFO are directly responsible for the accuracy, documentation and submission of all financial reports as well as the internal control structure to the SEC," according to sarbanes-oxley-101.com. So, Section 302 is essentially about the responsibilities of principal officers of the company, especially the principal executive and financial officers.
1. Obligations of officers: To certify each annual and quarterly report. To ensure that the issued financial statements and other financial information are not misleading. To ensure that the information is fairly presented.
2. Nature and Scope of Assertions:
a) That the information presented are fairly presented with no misleading statements
b) That the internal controls are in place and operating effectively
c) To asset that they are aware of all material information relating to the issuing company
d) That they have evaluated internal controls, their effectiveness, and changes in controls.
3. Accounting requirements:
a) Ensure effective internal accounting controls
b) Disclose all material financial information to auditors and audit committee
c) File periodic reports to SEC in compliance with section 13(a) and 15(d) of the SEC Act of 1934.
4. Legal liability of officers: This is covered in Section 906 of the Sarbanes-Oxley Act. The section prescribes that officers are liable for "penalties upward of $5 million in fines and 20 years in prison" for any violation of the Act.
Explanation:
The Sarbanes-Oxley Act of 2002 is a federal law which was made in response to the accounting scandals following the collapse of Worldcom and Enron. The purpose of the Act was to safeguard shareholders, employees, and the public from accounting errors and fraudulent financial practices by listed companies. According to sarbanes-oxley-101.com, the Act requires "all financial reports to include an Internal Controls Report," to prove the accuracy and adequacy of controls for ensuring that financial information is not misleading.
Honda’s BP program involves: a. A formalized approach for teaching the supplier to improve its own processes b. Tight control of suppliers c. Elimination of the bottom 10% of suppliers at the end of the program d. All of the above e. Only a and b
Answer:
a.
Explanation:
A BP Program or Best Practices Program is one that focuses on the process of reviewing different policy alternatives that have been proven to be effecting when dealing with certain issues in the past that have reoccurred in the present and applying them. Honda's unique BP program involves a formalized approach for teaching the supplier to improve its own processes in order for them not to have to outsource.
Refer to the following list of liability balances at December 31, 2019.
Accounts Payable $13,000
Employee Health Insurance
Payable 1,150
Employee
Income Tax Payable 1,200
Estimated Warranty Payable (Due 2020) 1,500
Long-Term Notes Payable (Due 2022) 41,000
FICA-OASDI Taxes Payable 1,160
Sales Tax Payable 770
Mortgage Payable (Due 2023) 8,000
Bonds Payable (Due 2024) 59,000
Current Portion of Long - Term Notes Payable 5,500
What is the total amount of long-term liabilities?
A. $100,000
B. $108,000
C. $41,000
D. $49,000
Answer:
B. $108,000
Explanation:
The computation of the total amount of long-term liabilities is shown below:-
Total amount of long-term liabilities = Long term notes payable (Due 2022) + Mortgage payable (Due 2023) + Bonds payable (Due 2024) + Long term liabilities
= $41,000 + $8,000 + $59,000
= $108,000
Therefore for computing the total amount of long-term liabilities we simply applied the above formula and we have not considered as they are not relevant and not covered into long-term liabilities as they all are current liabilities
In Concord, Inc., the Assembly Department started 61000 units and completed 70700 units. If beginning work in process was 30800 units, how many units are in ending work in process?
Answer:
Closing inventory = 21,100 units
Explanation:
The closing working in progress represent the units of work at the end of the period for which are yet to be completed in the period.
It is the sum of the opening inventory and the units introduced less the completed units. This given below in mathematical terms
Closing inventory = Opening inventory + Newly added - completed units
= 30,800 + 61,000 - 70,700= 21,100
Closing inventory = 21,100 units
For the question below, write an explanation of the short-run effect including the determinant of AD or AS that is causing the shift, the line that shifts (AD or AS), the direction of the shift (left or right), and the impact on output and price level (increase or decrease) and submit a properly drawn and labeled aggregate demand and aggregate supply graph for the scenario. Tourists flock to visit the major theme park's in Orlando, Florida.
Answer:
Tourists flock to visit the major theme park's in Orlando, Florida.
Determinant of AD: Consumer confidence is the best determinant in this case. Tourists flock the theme parks because households not only have enough money to spend on recreation, but also feel that they will continue to have enough money to make ends meet in the near future, otherwise they would not go to the parks, and instead would save the money.
Direction of the shift: the AD curve shifts to the right, because AD is increasing, and the AD curve increases when it shifts to the right.
Impact on output and price level: Output increases because consumer confidence, and as a result, consumer demand, is boosting aggregate demand.
Price level also increases, because demand is pushing the price of a good that has a relatively inelastic supply (the theme parks). In other words, demand is rising more than supply, and this increases the price.
42) Joe just inherited the family business, and having no desire to run the family business, he has decided to sell it to an entrepreneur. In exchange for the family business, Joe has been offered an immediate payment of $100,000. Joe will also receive payments of $50,000 in one year, $50,000 in two years, and $75,000 in three years. The current market rate of interest for Joe is 6%. In terms of present value (PV), how much will Joe receive for selling the family business? A) $$245,641 B) $254,641 C) $641,254 D) $254,461
Answer:
Total PV= $254,641.08
Option B.
Explanation:
Giving the following information:
Cash flows:
Cf0= $100,000
Cf1= 50,000
Cf2= 50,000
Cf3= 75,000
Interest rate= 6%
To calculate the present value, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf0= 100,000
Cf1= 50,000/1.06= 47,169.81
Cf2= 50,000/1.06^2= 44,499.82
Cf3= 75,000/1.06^3= 62,971.45
Total PV= $254,641.08
In order to find the future worth, F, from a present amount, P, 5 years from now at an interest rate of 6 % per year, compounded quarterly, what interest rate must be used in the F/P factor, (F/P,i%,n), when n is 20 quarters
Answer:
Interest rate = 1.5%
Explanation:
Given:
Future value = F
Present value = P
Number of Year (n) = 5 year × 4 quarters = 20
Interest rate = 6 % per year = 6 / 4 = 1.5% = 0.015
Computation:
Future value = Present value[tex](1+i)^n[/tex]
F/P = (1+0.015)²⁰
F/P = 1.34685501
When n = 20 quarters
F/P = (1+i)²⁰
1.34685501 = (1+i)²⁰
i = 0.015
Interest rate = 1.5%
Use the following table for the problem below.
1 Ping-Pong Balls 1 Hat
Larry 1/5 of a hat 5 ping-pong balls
Curly 1/2 of a hat 2 ping-pong balls
According to the opportunity cost table above, which trading proposal will Curly gain and Larry lose?
A. Larry offers Curly 1 ping-pong ball for 1/4 of a hat.
B. Curly offers Larry 1 hat for 3 ping-pong balls.
C. Curly offers Larry 1 hat for 4 ping-pong balls.
D. Larry offers Curly 1 ping-pong ball for 1/3 hat.
Answer:
No option is correct:
A. Larry offers Curly 1 ping-pong ball for 1/4 of a hat.B. Curly offers Larry 1 hat for 3 ping-pong balls. C. Curly offers Larry 1 hat for 4 ping-pong balls. D. Larry offers Curly 1 ping-pong ball for 1/3 hat.In order for Curly to win and Larry lose, Curly must offer 1 hat in exchange for 6 or more ping-pong balls.
Option A: Larry wins 1 ping-pong ball.Option B: Larry wins 2 ping-pong balls. Option C: Larry wins 3 ping-pong balls. Option D: Larry wins 0.13 of a hat.Explanation:
Opportunity costs are the benefits lost or extra costs associated to choosing one investment or activity over another alternative.
In this case, Larry can either have 1 hat or 5 ping-pong balls. Curly can have 1 hat or 2 ping-pong balls.
The flying of new employees to a three-day training session at Uberversity in San Francisco to learn about the company is part of the organization's:_______
a) labor relations
b) selection process
c) performance management
d) benefits
e) onboarding
Answer:
e) onboarding
Explanation:
Onboarding is the process by which new employees are introduced to the companie's culture including operational procedures and training on their job roles.
Onboarding is an important step in making the employee more efficient on the job. It is also called organisational socialising.
In the given scenario where new employees fly to a three-day training session at Uberversity in San Francisco to learn about the company, is an onboarding process.
Mitch likes his coworkers, thinks his pay is fair, and appreciates the interesting assignments his boss gives him, so Mitch is likely to have high A. emotional stability, B. self-management, C. self-awareness, D. job satisfaction
Answer:
D. job satisfaction
Explanation:
Job satisfaction measures how contented a staff is with his job. It measures how the employee feels about his job.
Mitch likes his job, his co workers and his salary. Mitch is likely to have a high job satisfaction
I hope my answer helps you
Arjun, a U.S. citizen, is a product manager who moved to Argentina to work at the South American office of Senlot Corporation, an American company. Based on this information, Arjun is a(n) ________ manager.
Answer:
The correct answer will be "Expatriate manger".
Explanation:
Expatriate managers may be described among those who don't seem country's citizens whereby they operate and were appointed due to various their advanced organizational skills but rather because of certain employment organization expertise.They support their businesses to develop international operations, reach international markets as well as transition expertise and competencies to business relationships of their corporations.So that Arjun is an Expatriate manger,
Watters Umbrella Corp. issued 20-year bonds 2 years ago at a coupon rate of 6.4 percent. The bonds make semiannual payments. If these bonds currently sell for 110 percent of par value, what is the YTM
Answer:
2.78%
Explanation:
The YTM formula is:
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
coupon = $32face value = $1,000market value = $1,000 x 110 = $1,100n = 18 x 2 = 36YTM = {$32 + [($1,000 - $1,100)/36]} / [($1,000 + $1,100)/2] = $29.222 / $1,050 = 2.78%
Suppose Stark Ltd. just issued a dividend of $2.33 per share on its common stock. The company paid dividends of $2.00, $2.08, $2.15, and $2.26 per share in the last four years. If the stock currently sells for $55, what is your best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends?What if you use the geometric average growth rate?
Answer:
arithmetic average growth rate = (4% + 3.37% + 5.12% + 3.1%) / 4 = 3.9%
we need to find the required rate or return (RRR) in the following formula:
stock price = expected dividend / (RRR - growth rate)
expected dividend = $2.33 x 1.039 = $2.42stock price = $55growth rate = 0.03955 = 2.42 / (RRR - 0.039)
RRR - 0.039 = 2.42 / 55 = 0.044
RRR = 0.083 = 8.3%
geometric average growth rate = [(1.04 x 1.0337 x 1.0512 x 1.031)¹/⁴] - 1 = 3.89%
again we need to find the required rate or return (RRR) in the following formula:
stock price = expected dividend / (RRR - growth rate)
expected dividend = $2.33 x 1.0389 = $2.42stock price = $55growth rate = 0.038955 = 2.42 / (RRR - 0.0389)
RRR - 0.0389 = 2.42 / 55 = 0.044
RRR = 0.0829 = 8.29%
You purchased 400 shares of stock at a price of $55.77 per share. Over the last year, you have received total dividend income of $455. What is the dividend yield
Answer:
The dividend yield on the stock investment is 2.04%
Explanation:
The dividend yield is the total dividends received amounting to $455 divided by the cost of shares purchased at $55.77 per share.
Cost of share purchase=$55.77*400
cost of share purchase=$22,308.00
total dividends=$455.00
dividend yield=$455.00/$22,308.00
dividend yield=2.04%
Job 303 includes direct materials costs of $550 and direct labor costs of $400. If the predetermined overhead allocation rate is 40% of direct labor cost, what is the total cost assigned to Job 303
Answer:
180
Explanation: Divide 550 and 400 and equal 40% over x
Seashore Home provides house-sitting for people while they are away on vacation. Some of its customers pay immediately after the job is finished. Some customers ask that the business send them a bill. As of the end of the year, Seashore Home has collected $3,200 from cash-paying customers. Seashore Home’s remaining customers owe the business $1,380. Seashore Home recorded $3,200 of service revenue for the year.
If Seashore Home had recorded their service revenue using the other method, how much service revenue would they have recorded for the year?
Answer:
$4,580
Explanation:
Cash method:
Currently, Seashore is recording revenue on a cash basis and recorded $3,200 from the customers.
Accrual Method(Other Method)
So r\the revenue recorded by seashore using the accrual method would be the sum of both cash and credit customers.
Revenue = $3,200 + $1,380
Revenue = $4,580
Gerard, a job applicant, was asked to appear for an interview by an organization. Gerard spent the first 15 minutes of the job interview relating details about his education and work experience to the interviewer. This is a _____ interview.
Answer:
The answer is biographical interview
Explanation:
A biographical interview takes place during an interview where the interviewee tells his or her life story(ranging from family background to work experience, education etc). It requires describing and explaining one's own life to the interviewer.
Examples of Biographical interview questions can be:
Tell me about yourself?
What are you strengths? Etc.
Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2014 are presented below.
End of Year Beginning of Year
Cash and cash equivalents $ 795 $ 72
Accounts receivable (net) 2,035 1,942
Inventory 898 900
Other current assets 326 303
Total current assets $4,054 $3,217
Total current liabilities $2,014 $1,601
For the year, net credit sales were $8,258 million, cost of goods sold was $5,328 million, and net cash provided by operating activities was $1,251 million.
Instructions:
Compute the current ratio, current cash debt coverage, accounts receivable turnover, average collection period, inventory turnover, and days in inventory at the end of the current year.
Answer:Please see explanation for answers
Explanation:
A) Current Ratio = Current Assets / Current Liabilities
Total Current Assets = $4,054million
Total Current Liabilities = $2,014million
Current Ratio = 4,054 / 2,014 = 2.01 : 1
B. Current Cash Debt Coverage Ratio = Cash flow Provided by Operating Activities / Average Current Liabilities
Average Current Liabilities = 2,014 + 1,601= 3,615 / 2 = $1,807.5
Current Cash Debt Coverage Ratio = 1,251 / 1,807.5 = 0.6921
C. Accounts receivable Turnover = Net Sales / Average Accounts Receivables
Average Account Receivable = 2,035 + 1,942= 3,977 / 2 = $1,988.50million
Net Sales = $8,258million
Account Receivable Turnover = 8,258million / 1,988.50million = 4.15 Times
D. Average Collection Period: 365 / Account Receivable Turnover
Average Collection Period = 365 / 4.15 = 87.95 Days
E. Inventory Turnover = Cost of Goods Sold / Average Inventory
Cost of Goods Sold = 5,328million ,
Average Inventory = 898 + 900 =1,798 / 2 = 899
Inventory Turnover = 5,328 / 899 = 5.93 Times
F. Days in Inventory = 365 / Inventory Turnover Ratio
Days in Inventory = 365 / 5.93 = 61.55 Days
What action can a supervisor take to reinforce the desired change and create a work environment that nourishes successful people?
Answer:
Communicate the reasons for the change.
Explanation:
Remember, reinforcement involves not necessarily employing harsh measures, but communicating with a view to persuade into action.
Since a supervisor is often seen as a head among his colleagues, he thus can exert influence on other employees by explaining the reasons and benefits for such change, doing so would steer employees into accepting the organisational change.
Griffin's Goat Farm, Inc., has sales of $604,000, costs of $255,000, depreciation expense of $53,000, interest expense of $35,000, and a tax rate of 23 percent. What is the net income for this firm
Answer:
The answer is $200,970
Explanation:
Solution
Given that
Now
Sales =$604,000
Costs= $255,000
Depreciation=$53,000
Thus
EBIT (Earnings before taxes and interest)=$296,000
The interest Expense = $35,000
Taxable income =$200,970
Taxes($261,000 * 23% =$60,030
The net income = $200,970
Therefore the net income for the firm is $200,970
Answer:
$200,970
Explanation:
Hope this helps
A good manager can be flexible when it comes to sticking to the original plan; to get good results, the intended strategy has to become the realized strategy.
a. True
b. False
Answer:
False
Explanation:
Hope this helps my loves :)
Bob and Alice want to remodel their bathroom in 4 years. They estimate the job will cost $35,000. How much must they invest now at an annual interest rate of 4% compounded quarterly to achieve their goal? The Morenos invest $9000 in an account that grows to $11,000 in 4 years. What is the annual interest rate r if interest is compounded
a. Quarterly
b. Continuously
A) a. 2.192% b.2.179%
B) a. 4.5432% b.4.5153%
C) a. 6.0576% b. 6.0204%
D) a. 5.048% b.5.017%
Answer:
Bob and Alice want to remodel their bathroom in 4 years. They estimate the job will cost $35,000. How much must they invest now at an annual interest rate of 4% compounded quarterly to achieve their goal?
we need to use the present value formula:
present value = future value / (1 + interest rate)ⁿ = $35,000 / (1 + 1%)¹⁶ = $29,848.74
The Morenos invest $9000 in an account that grows to $11,000 in 4 years. What is the annual interest rate r if interest is compounded
a. Quarterly
$9,000 = $11,000 / (1 + r)¹⁶
(1 + r)¹⁶ = $11,000 / $9,000 = 1.2222
¹⁶√(1 + r) = ¹⁶√1.2222
1 + r = 1.01262
r = 0.01262 = 1.26% ⇒ quarterly interest rate
annual interest rate = 1.26% x 4 = 5.048%
b. Continuously
future value = present value x eᵃⁿ
future value = $11,000present value = $9,000e = 2.718a = interest rate ???n = 4 years$11,000 = $9,000 x 2.718⁴ⁿ
2.718⁴ⁿ = $9,000 / $11,000 = 0.818181818
⁴√2.718⁴ⁿ = ⁴√0.818181818
2.718ⁿ = 0.95107
nlog2.718 = log0.95107
n 0.434249452 = -0.021787543
n = -0.021787543 / 0.434249452 = -0.05017, since n must be positive, then
n = 0.05017 = 5.017%
D) a. 5.048% b. 5.017%
The demand and supply for catnip are given by the following tables: Demand Price Quantity Supply Price Quantity $1.50/lb 2.00 2.50 3.00 3.50 4.00 10 lb 9 8 7 4 3 $1.50/lb 2.00 2.50 3.00 3.50 4.00 4 lb 5 6 7 10 11 What quantity is sold in equilibrium, and at what price
Answer:
7
$3
Explanation:
Equilibrium is the point where Quanitity supplied equals quantity demanded. The price at this point is known as the equilibrium price and the Quanitity at this point is known as equilibrium Quanitity.
Quanitity demanded is equal to Quanitity supplied at 7 units. Price at this point is $3
Please check the attached image for a clearer image of this question.
I hope my answer helps you
Answer:
What that guy said above me
Explanation:
Income statements under absorption and variable costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (3,000 units) $2,310,000 Production costs (3,000 units): Direct materials $993,300 Direct labor 427,200 Variable factory overhead 69,600 Fixed factory overhead 109,200 1,599,300 Selling and administrative expenses: Variable selling and administrative expenses $49,600 Fixed selling and administrative expenses 20,800 70,400 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 $ $ $ b. Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 $ $ $ Fixed costs: $ $ c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)
Answer:
Gallatin County Motors, Inc.
a. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31:
Sales (3,000 units) $2,310,000
Production costs (3,000 units):
Direct materials $993,300
Direct labor 427,200
Variable factory overhead 69,600
Fixed factory overhead 109,200
Total production costs 1,599,300 1,599,300
Gross profit $710,700
Selling and administrative expenses:
Variable selling and administrative $49,600
Fixed selling and administrative 20,800
Net Income $640,300
b. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31:
Sales (3,000 units) $2,310,000
Production costs (3,000 units):
Direct materials $993,300
Direct labor 427,200
Variable factory overhead 69,600
Variable selling and administrative 49,600
Total production costs 1,539,700 1,539,700
Contribution $770,300
Fixed expenses:
Fixed factory overhead 109,200
Fixed selling and administrative 20,800 130,000
Net Income $640,300
c. Reason for the difference in the amount of the operating income in (a) and (b):
There is no difference in this case. A difference would arise if there were beginning and closing inventories from the different treatment of fixed production overheads, which are absorbed in the product costs.
Explanation:
Gallatin County Motors, Inc.'s income statement under absorption costing technique measures the cost of production and net income by taking into full account the full production costs, including fixed overheads. It reports a gross profit figure which compares the full cost of production and the service revenue.
On the other hand, Gallatin County Motors, Inc.'s income statement under the variable costing technique measures the cost of production and net income by taking into account all the variable costs. With this technique, a contribution margin is the difference between service revenue and variable costs.
Differences in the reported net income arise from the presence of beginning and ending inventory. Another difference is that while absorption costing income statement reports a gross profit figure before net income, the variable costing income statement reports a contribution margin and, in addition, regards all fixed costs as period costs.
An income statement for Gallatin County Motors, Inc. uses an absorption costing approach to calculate the cost of production and net income by accounting for all production expenses, including fixed overheads.
It gives a gross profit statistic that compares the whole cost of manufacturing to the income from services.
The calculations of the net operating income have been attached below.
c. Reason for the discrepancy in operating income amounts in (a) and (b):
In this scenario, there is no distinction. If there were beginning and closing inventories, a difference would develop due to the different treatment of fixed production overheads, which are included in product costs.
This same existence between marking inventories creates differences in the recorded net income.
Another distinction is that, although an absorption costing income statement shows gross profit before net profit, a flexible budget income statement shows a contribution margin and treats all fixed expenses as period costs.
To know more about the calculations of the net operating income, refer to the link below:
https://brainly.com/question/15864433