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Serggg [28]
3 years ago
8

The owner of a bicycle repair shop forecasts revenues of $212,000 a year. Variable costs will be $63,000, and rental costs for t

he shop are $43,000 a year. Depreciation on the repair tools will be $23,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
Business
1 answer:
Nataly [62]3 years ago
7 0

Answer:

Sales Revenue            212,000

Variable Cost               (63,000)

Rent Expense               (43,000)

Depreciation Expense (23,000)

Income before taxes     83,000

Income tax expense <u>    (16,600)   </u>

Net Income                    84,800

Cash from operating activities 107,800

tax-shield from depreciation 4,600

Explanation:

Cash flow from operations (indirect method)

net income 84,800 + depreciation expense = 107,800

The depreciation provides a tax shield as they are an accounting concept. The depreciation expense did not involve the outflow of cash but, it is a taxable deduction therefore generates a tax-shield.

23,000 x 20% = 4,600

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cupoosta [38]
4500 + 750 + 850 + 6250 = 13,350 totally amount
5 0
4 years ago
Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data
Alla [95]

Answer:

Blinks= $18.4

Dinks= $110.4

Explanation:

Giving the following information:

Blinks:

Units= 947

Direct labor hours per unit= 1

Dinks:

Units= 1,811

Direct labor hours per unit= 6

Fabrication Department= $109,400.

Assembly Department= $108,000.

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Total overhead= 109,400 + 108,000= $217,400

Total direct labor hours= (947*1) + (1,811*6)= 11,813

Predetermined manufacturing overhead rate= 217,400/11,813

Predetermined manufacturing overhead rate= $18.40 per direct labor hour.

Now, the unitary allocated overhead per unit:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Blinks= 1*18.4= $18.4

Dinks= 6*18.4= $110.4

7 0
3 years ago
Which of the following is the most important competitive factor in determining a company's ability to secure contracts to supply
Bogdan [553]

The company's price offer is the most important competitive factor in determining a company's ability to secure contracts to supply private-label footwear to large multi-outlet retailers of athletic footwear in a particular geographic region.

The S/Q ratings of both branded and private-label footwear manufactured at each production plant can be raised through TQM/Six Sigma quality control systems and best practices training.

Five things affect the S/Q rating: The following factors should be taken into account: (1) current-year spending per footwear model for new features and styling; (2) the percentage of superior materials used; (3) current-year expenditures for Total Quality Management (TQM) and/or Six Sigma quality control programs; (4) cumulative expenditures for TQM/Six Sigma quality control efforts (to reflect learning and experience curve effects); and (5) current-year and cumulative expenditures to train employees in using the best practices to assemble athletic footwear.

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7 0
1 year ago
Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own;
valentinak56 [21]

A)Degree of operating leverage=Contribution/EBIT

=6400,000/2140000=2.99.

B) Degree of operating leverage=Contribution/EBIT

=5600,000/1340000=4.18

C) Degree of operating leverage=Contribution/EBIT

=7600,000/1015000=7.49

One conclusion that companies can draw from examining operational leverage is that companies that minimize fixed costs can increase profits without changing selling prices, contribution margins, or unit sales.

The Operating Leverage formula is used to calculate a company's break-even point, helping to set a reasonable selling price that covers all costs and produces a profit. This gives you insight into how well your company is using fixed-cost items such as inventory and machinery to make a profit. The more profit a company can extract from the same amount of fixed assets, the higher its operational leverage.

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4 0
1 year ago
Red, Jess, and Frankare coworkers at Crossroad Inc. Having worked at CI for five years now, the three are discussing their caree
joja [24]

Answer:

The correct answer is Normative Commitment.

Explanation:

Normative commitment is defined as a psychological vision of the members of an organization and their attachment to the workplace. Employee engagement is essential to determine if workers will remain for a longer period of time and will do so with the passion necessary to achieve the established objectives.

Knowing the normative commitment helps predict job satisfaction, workforce commitment, leadership distribution, performance, job insecurity, etc. It is important that this be observed from the point of view of management in order to know their dedication to the tasks assigned daily.

8 0
3 years ago
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