Answer:
a 1) Income statement option 1
sales ( 3,900 * $36) $140,400
COGS (3,900*$15) - $58,500
Gross profit $81,900
General Selling and Admin costs -$67,500
Net income $14,400
Balance sheet
Assets
Current Assets
Inventory (600 *15) $9,000
Bank $104,400
total Assets $113,400
Equity and Liabilities
Equity
Common stock $99,000
Retained Earnings $14,400
Total Equity And Liabilities $113,400
a 2) Income Statement option 2
sales ( 3,900 * $36) $140,400
COGS (3,900 * 30) -$117,000
Gross profit $23400
Net income $23,400
Balance sheet
Inventory (600 *30) $18,000
Bank $104,400
total Assets $122,400
Equity and Liabilities
Equity
Common stock $99,000
Retained Earnings $23,400
Total Equity And Liabilities $122,400
b ) Option 2 is more likely to leave a favorable impression on investors and creditors hence more profits, assets and ROA of 6.43% more than option 1.
c) option 1 option 2
Bonus (net income *15%) $2,160 $3,510
Option 2 has a higher bonus than option 1
d) option 1 option 2
Tax expense (35%) of net income $5,040 $8,190
Option 1 Pays little tax therefore minimizes tax expense.
Explanation:
unit cost = Total cost of production / units produced
= 67,500/4500
= $15 option 1
unit cost = Total cost of production / units produced
=(67500+67500) /4500
=135000/4500
= $30 option 2
closing inventory = 4500-3900= 600
Bank ( 99000-67500-67500 +140400) = 104400
