All categories

3 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]3 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:

You might be interested in

A customers calls her broker to discuss her account. The broker recommends that the customer buy 500 shares of DEF stock. The cu

KIM [24]

Answer:

A. Market Order

Explanation:

In a market order, the securities are bought and sold immediately at the current market price prevailing at that time of the day.

Under this, order size is entered such as quantity of stock, the action to be taken i.e buy or sell and no buying/selling rate is mentioned, rather "market" option is checked.

Such market price keeps fluctuating every every moment so the order would be completed at that price which prevailed at that exact moment.

In the given case, the broker upon instructions of the client immediately got the order executed of 500 shares in less than a minute. This is the case of market order wherein the order was executed at current market price.

3 0

3 years ago

Exercise 19-9 Income statement under absorption costing and variable costing LO P1, P2 IThe following information applies to the

ivolga24 [154]

Answer:

When you are calculating variable costing, COGS only includes variable costs. All fixed costs are included as period costs at the end. Fixed costs are not carried forward either.

Income Statement (variable costing) - J Cool Sky

total sales $140 x 36,000 units sold = $5,040,000

variable COGS ($3,240,000)

variable direct costs ($60 + $22) x 36,000 = ($2,952,000)

variable overhead ($8 x 36,000) ($288,000)

manufacturing margin $1,800,000

variable administrative and selling costs ($11 x 36,000) = ($396,000)

contribution margin $1,404,000

fixed costs ($633,000)

fixed overhead = ($528,000)

administrative and selling = ($105,000)

net income $771,000

In order to prepare the income statement using absorption costing, we must first determine COGS = [(total variable manufacturing costs + total fixed manufacturing costs) / total output] x units actually sold

COGS = {[($60 + $22 + $8) x 44,000] + $528,000} / 44,000] x 36,000 = [($3,960,000 + $528,000) / 44,000] x 36,000 = $102 x 36,000 = $3,672,000

Income Statement (absorption costing) - J Cool Sky

total sales $140 x 36,000 units sold = $5,040,000

COGS ($3,672,000)

gross profit $1,368,000

variable administrative and selling costs $11 x 36,000 = ($396,000)

fixed administrative and selling costs ($105,000)

net income $867,000

The difference between both accounting methods is that variable costing includes all fixed manufacturing costs during the period and the ending inventory is carried forward only at a lower cost since it only includes variable costs. Absorption costing calculates ending inventory using the total fixed costs, that is why COGS is lower.

3 0

3 years ago

Oliver works at Tate Corp., an apparel manufacturing company. He primarily focuses on the tastes and needs of the firm's custome

aleksandrvk [35]

Answer:

Explanation:

8 0

3 years ago

A taxpayer places a $50,000 5-year recovery period asset in service in 2016. this is the only asset placed in service in 2016. a

Charra [1.4K]

50,000×5=250,000
250,000÷4=625,000
250,000-625.000=375.00
Sum=375.00

8 0

3 years ago

Stockholders' equity totaled $94,000 at the beginning of the year. During the year, net income was $24,000, dividends of $9,000

Tomtit [17]

Answer:

$131,000

Explanation:

The computation of the ending balance of stockholder equity is shown below:

= Beginning balance of stockholder equity + net income - dividend paid + additional common stock issued

= $94,000 + $24,000 - $9,000 + $22,000

= $131,000

Therefore, the ending balance of stockholder equity is $131,000

We simply added the net income and the additional common stock issued and deduct the dividend paid to the beginning balance of stockholder equity so that the ending balance could come

7 0

3 years ago