Which of the following are requirements for product manufacturing?

Sales (19,500 units at $30 per unit) $585,000 Variable expenses 409,500 Contribution margin 175,500 Fixed expenses 180,000 Net o

vichka [17]

Answer:

Automated

Sales (19,500 units at $30 per unit) $585,000 $585,000

Variable expenses 409,500 351,000

Contribution margin 175,500 234,000

Fixed expenses 180,000 252,000

Net operating loss $(4,500) $( 18,000)

New Cm ratio= Contribution Margin/ Sales Revenue

= $ 234,000 $ 585,000 = 0.4

Break-even point in dollars= Fixed Costs/ 1- (variable Cost/ Sales)

= 252,000/ 1- (351,000/ 585,000)

= 252,000/ 1-0.6

= 252,000/0.4= $ 630,000

The resulting $ 630,000 is the break even point at which neither a loss nor a profit is incurred.This can be checked as follows.

Sales $ 630,000

Variable Costs ( 60 % $ 630,000) $ 378,000

Contribution Margin $ 252,000

Less Fixed Expense <u>$ 252,000</u>

Profit <u> 0 </u>

Break even point in units = Fixed Costs/ Contribution Margin in units

= $ 252,000/ (30-18)

=$ 252,000/ $ 12= 21,000 units

Two Contribution format Income Statements:

Automated

Sales (26,000 units at $30 per unit) $780,000 $780,000

Variable expenses 546,000 468,000

Contribution margin 234,000 312,000

Fixed expenses 180,000 252,000

Net operating Profit $ 54,000 $ 60,000

Working:

Variable Costs per unit = $ 409500/19500= $ 21

After reduction variable costs = $ 21- $3= $ 18

4 0

3 years ago

Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving s

horsena [70]

Answer:

1). Account receivables A/c Dr. $1,345,000

To sales revenue A/c $1,345,000

(Being the sales revenue is recorded)

Cost of good sold A/c Dr. $975,700

To merchandise inventory A/c $975,700

(Being the cost is recorded)

2. Allowance for doubtful accounts A/c Dr. $19,400

To accounts receivable A/c $19,400

(Being the written off is recorded)

3. Cash A/c Dr. $670,800

To accounts receivables A/c $670,800

(Being cash received is recorded

1. .Account receivable A/c Dr. $1,529,400

To sales A/c $1,529,400

(Being the sales revenue is recorded)

Cost of good sold A/c Dr. $1,332,100

To merchandise inventory A/c $1,332,100

(Being the cost of goods sold is recorded)

2. Allowance for doubtful accounts A/c Dr. $27,000

To Account receivable A/c $27,000

(Being the written off amount is recorded)

3. Cash A/c Dr. $1,391,600

To account receivable A/c $1,391,600

(Being the cash received is recorded)

4. Bad-debts expense A/c Dr. $28,000

(765,600 × 1% + 20,344)

To allowance for doubtful accounts A/c $28,000

(Being the bad debt expense is recorded)

Working note:

Ending Receivables = (654800 + 1529400 - 27,000 - 1,391,600) = $765,600

Total Receivables of 1st Year = 1,345,000 - 19,400 - 670,800 = $654,800

Before Adjustment Ending Allowance Balance = 65,4800 × 1% - 27,000

= 6,548 - 27,000

= 20,344 Debit BalanceThe journal entries are shown below:

According to the scenario, computation of the given data are as follows:-

Journal Entries for 1st year

1). Account receivables A/c Dr. $1,345,000

To sales revenue A/c $1,345,000

(Being the sales revenue is recorded)

Cost of good sold A/c Dr. $975,700

To merchandise inventory A/c $975,700

(Being the cost is recorded)

2. Allowance for doubtful accounts A/c Dr. $19,400

To accounts receivable A/c $19,400

(Being the written off is recorded)

3. Cash A/c Dr. $670,800

To accounts receivables A/c $670,800

(Being cash received is recorded)

4. Bad-debts expense A/c Dr. $38,389

(1,345,000-19,400-670,800) × 2.90+ $19,400

To allowance for doubtful accounts A/c $38,389

(Being the bad debt expense is recorded)

Journal Entries for 2nd year

1. .Account receivable A/c Dr. $1,529,400

To sales A/c $1,529,400

(Being the sales revenue is recorded)

Cost of good sold A/c Dr. $1,332,100

To merchandise inventory A/c $1,332,100

(Being the cost of goods sold is recorded)

2. Allowance for doubtful accounts A/c Dr. $27,000

To Account receivable A/c $27,000

(Being the written off amount is recorded)

3. Cash A/c Dr. $1,391,600

To account receivable A/c $1,391,600

(Being the cash received is recorded)

4. Bad-debts expense A/c Dr. $28,000

(765,600 × 1% + 20,344)

To allowance for doubtful accounts A/c $28,000

(Being the bad debt expense is recorded)

Working note:

Ending Receivables = (654800 + 1529400 - 27,000 - 1,391,600) = $765,600

Total Receivables of 1st Year = 1,345,000 - 19,400 - 670,800 = $654,800

Before Adjustment Ending Allowance Balance = 65,4800 × 1% - 27,000

= 6,548 - 27,000

= 20,344 Debit Balance

Explanation:

8 0

2 years ago

Sales revenue

Ne4ueva [31]

Answer:

may be recorded before cash is collected.

Explanation:

Sales revenue "may be recorded before cash is collected."

This is according to Accrual accounting, which unlike the cash model that requires payments to be made before sales revenue is recorded.

In the Accrual accounting model, sales revenue recording is not based on cash collection before it is recorded. Here, the revenue is recorded in as much the transferred goods are made and collection of payment is determined or expected.

4 0

3 years ago

We observe that total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units. Which of the follow

iren2701 [21]

Answer:

c. Fixed Cost = $300

Explanation:

Because marginal cost is constant we can find the variable cost per unit and then subtract the total variable cost from the total cost in order to find the fixed cost. The firms total cost increase $300 (from 1500 to 1800) when output increases by 10 units (from 40 to 50), so the variable cost per unit is 300/10=30.

Now to calculate the total variable cost we will multiply variable cost per unit by the number of units.

50*30= 1500

Now we will subtract 1500 from 1800 in order to find the fixed cost.

1800-1500=300

Fixed cost is $300.

7 0

3 years ago

S. S. Sarkar (S.S.S.), a real estate investment company, is considering investing in a shopping center. The sale price is $5,000

Alex777 [14]

Answer:

S.S.S. should not purchase the shopping center because its NPV is negative, i.e. -$1,952,890.30

Explanation:

Note: See the attached file to see how the net present value is calculated.

From the file, it can seen that the project will result in a negative NPV of $1,952,890.30. Therefore, S.S.S. should not purchase the Shopping center.

Download xlsx

7 0

3 years ago