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dimaraw [331]
3 years ago
13

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018

is as follows: Sales (168,000 units) $1,010,000 Less: Cost of goods sold 690,000 Gross margin 320,000 Operating expenses 400,000 (includes $55,000 of fixed costs) Operating income -$80,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. What is the budgeted operating income for March 2018
Business
1 answer:
Rama09 [41]3 years ago
6 0

Answer:

February Kaizen Budgeted Operating income -$ 69,650

March Kaizen Budgeted Operating income-$ 59,405.5

Explanation:

The Kaizen costing primarily focuses on production processes and in it the cost reductions are obtained through increasing efficiency.

Sales (168,000 units) $1,010,000

Less: Cost of goods sold 690,000

Gross margin 320,000

Operating expenses 400,000 (includes $55,000 of fixed costs)

Operating income -$80,000

<u>Calculations For February</u>

Decrease by 1% of COGS  $ 690,000= $ 690,000-$6900=$ 683,100

Decrease by 1% of Variable Expenses $ 345000= $ 345000-3450= $ 341550

Budgeted Operating Income Under Kaizen Costing For February

Sales (168,000 units) $1,010,000

Less: Cost of goods sold 683,100

Gross margin 326,900

Operating expenses

Variable Expenses $ 341550

Fixed Costs $55,000

Operating income -$ 69,650

<u>Calculations For March</u>

Decrease by 1% of COGS  $ 683,100= $ 683,100-$6831=$ 676,269

Decrease by 1% of Variable Expenses $ 341 550= $ 341550-3415.5= $ 338134.5

Budgeted Operating Income Under Kaizen Costing For March

Sales (168,000 units) $1,010,000

Less: Cost of goods sold $ 676,269

Gross margin 333,731

Operating expenses

Variable Expenses $ 338134.5

Fixed Costs $55,000

Operating income -$ 59,405.5

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Ginny Trueblood is considering an investment which will cost her $120,000. The investment produces no cash flows for the first y
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The project should be rejected as the payback period of 3.97 years exceeds the required 3 years. So, the correct option is E

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= 3 + ($120,000 - $0 - $28,925.62  - $41,322.31  / $51,226.01)

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Working Note:

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For 3rd year:

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6 0
3 years ago
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Answer:

c. A credit to Cash of $272.75.

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These transactions can be explained with the help of T- Account .

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Freight $61

Shipping

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Supplies  $ 50

Donation  $ 69

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<u>Fund     $ 227.25                     </u>

                        Fund   $ 227.25

<u>               Reimbursement </u><u> $272.75</u>

<u>                                             $ 500   </u>

<u />

<em><u>As there is shortage of $ 272.25 in the amount of $ 500 the petty cash will be reimbursed with this amount.</u></em>

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