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2 years ago

LO 2.1Explain how the income statement of a manufacturing company differs from the income statement of a merchandising company.

Business

1 answer:

marshall27 [118]2 years ago

7 0

Answer:

Revenue: The revenue of Manufacturing company comes from the sale of the products that they manufacture. However the merchandising company purchases goods from manufacturing companies and distribute them to make it easier for the customer to access the product and earn a profit on it which increases the cost of the product to end consumer. The contract between the manufacturing and merchandising company can be an agreement of principal and agent. In this case, the revenue for the merchandising company would be commission earned from manufacturing company. This commission paid to merchandising company will be cost to manufacturing company.

Cost of Sale: Now the raw material costs plus depreciation of production machinery plus direct labour plus variable Overhead cost plus if their is any commission paid for sale of finished goods will be the cost of sale for manufacturing company. Whereas in the case of Merchandising company, the cost of sale will be only the cost of goods they sold in the year. The depreciation charge will be minor in merchandising company as they don't have any production machineries.

These the are major difference between manufacturing and merchandising company.

Explanation:

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Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations:

Variable costs per unit:

Manufacturing:

Direct materials $ 6

Direct labor $ 9

Variable manufacturing overhead $ 3

Variable selling and administrative $ 4

Fixed costs per year:

Fixed manufacturing overhead $ 300.000

Fixed selling and administrative $ 190.000

During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit.

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1 year ago

Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy camer

Phoenix [80]

Answer:

Product Costs :

2. Rent on equipment used in the factory.

3. Lubricants used for machine maintenance.

5. Soap and paper towels used by factory workers at the end of a shift.

6. Factory supervisors salaries

7. Heat, water, and power consumed in the factory.

10. Workers compensation insurance for factory employees.

11. Depreciation on chairs and tables in the factory lunchroom.

15. The cost of packaging the company`s product.

Period Costs :

1. Depreciation on salespersons cars.

4. Salaries of personnel who work in the finished goods warehouse.

8. Materials used for boxing products for shipment overseas.

9. Advertising costs.

12. The wages of the receptionist in the administrative offices.

13. Cost of leasing the corporate jet used by the company`s executives.

14. The cost of renting rooms at a Florida resort for the annual sales conference.

Explanation:

<em>Product Costs</em> are Costs attached to Product and Included in Valuation.

<em>Period Costs</em> are Not Attached to Products and are expended in Income Statement during the Period in which they are incurred.

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2 years ago

Sold merchandise on credit to Rondo Distributors, for $1,200, terms n/30. The cost of the merchandise was $720. 8 Purchased merc

Iteru [2.4K]

Answer:

See the explanation.

Explanation:

Account receivable Rondo Distributors debit $1,200

Sales revenue credit $1,200

Note: To record the merchandise sales on account. As the company used the periodic inventory system, we do not need to give the cost of goods sold journals.

Purchase debit 10,000

Accounts payable credit 10,000

Note: To record the purchase on account.

Delivery expense debit $525

Cash credit $525

Note: To record the payment of the delivery expense.

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3 years ago

Craig and Kris were walking directly toward each other in a congested store aisle. Craig moved to his left to avoid Kris, and at

Andreas93 [3]

Answer:

does not achieve a mutually beneficial equilibrium because there is a lack of coordination of the actions of people and businesses

Explanation:

From the question, we are informed about Craig and Kris who were walking directly toward each other in a congested store aisle. Craig moved to his left to avoid Kris, and at the same time Kris moved to his right to avoid Craig. They bumped into each other. This example illustrates the concept of coordination failure and in this case, This idea relates to macroeconomic instability because the economy does not achieve a mutually beneficial equilibrium because there is a lack of coordination of the actions of people and businesses. Coordination failure can be regarded as failure that takes place as a result of group of firms want to achieve a more desirable equilibrium, but resulted to failure as a result of their decision making not been coordinated

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2 years ago

If a painter tells you that he would spent $30 on a resperator (but not $31) that protects him from paint fumes that produce a 0

Anestetic [448]

Answer:

$300,000

Explanation:

Data provided in the question:

Amount the painter would like to spend on a respirator = $30

Chances of paint fume killing the painter = 0.01%

Now,

The cash value he places on the life of painter

= [ Amount spent on respirator ] ÷ [ Probability of death ]

= 30 ÷ 0.01%

= 30 ÷ 0.0001

= $300,000

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3 years ago