1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Masja [62]
3 years ago
7

Conceptual Connection: If Gilmore's estimate of bad debts is correct (2.2% of credit sales) and the gross margin is 20%, by how

much did Gilmore's income from operations increase assuming $150,000 of the sales would have been lost if credit sales were not offered?
Business
1 answer:
Alika [10]3 years ago
5 0

Answer:

increase in income = $18736

Explanation:

solution

we consider here 2 case

case 1 is

Credit Sales with bad debt estimation @ 2.2%

and

Case 2 is

Cash Sales only

so as in both the cases we are indifferent towards cash sales of $135000 as Gilmore would earn the same margin and there is no bad debt scenario.

so in case 1  gross margin is  

Gross Margin = 20% of 512000

Gross Margin  = $102400

and

Bad Debt Estimation @ 2.2% is  = $11264

so Net Margin =  $102400  -$11264  =

Net Margin =  $91136

and

in case 2 is

as company have gone for all cash sales then it will able to sell $150000 less

so cash Sales =  512000 – 150000

cash Sales = $362000    

and

Margin = 20% of 362000

Margin = $ 72400

so that  increase in income from operations by selling on credit is

increase in income from operations by selling on credit = 91136 - 72400

increase in income = $18736

You might be interested in
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump produ
pentagon [3]

Answer: $150,000 financial disadvantage.

Explanation:

Discontinuing the bilge pump product line will eliminate its variable costs but however we are told that some fixed costs will remain.

So then to find out the financial advantage (disadvantage), the fixed costs that will be removed/ saved need to be removed as well to see what will be left if the line is discontinued.

The Contribution Margin is Sales less variable costs so it already removes the Variable cost savings.

Discontinuing would have no effect on the company’s total general factory overhead or total Purchasing Department expenses so the fixed cost savings will be from Advertising, Salary of Product line manager and insurance of inventories.

Fixed cost savings = 270,000 + 32,000 + 8,000

= $310,000

The Contribution Margin the company is losing is ($460,000) by discontinuing.

Less the fixed costs saved,

= (460,000) + 310,000

= ($150,000)

Costs of ($150,000) remain after the fixed costs saved have been accounted for.

The company is therefore at a financial (disadvantage) of $150,000 for discontinuing the bilge pump product.

7 0
2 years ago
The following facts relate to Coronado Corporation.
elena-14-01-66 [18.8K]

Answer: See explanation

Explanation:

a. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020.

Debit Income Tax Expense $40400

Debit Defered Tax Asset $7070

Credit Income Tax Payable $19190

Credit Defered tax liability $28280

(To record income tax expense and defered tax/liability).

Note that:

Income Tax Expense was gotten as:

= $202,000 × 20%

= $202000 × 0.2

= $40,4000

Income Tax Payable was gotten as:

= $95,950 × 20%

= $95950 × 0.2

= $19,190

2. Prepare the income tax expense section of the income statement for 2020.

Income statement for year ended 31 December 2020

Income before tax = $202000

Less: Income Tax expense - Current = $19190

Less: Income Tax expense - Defered = $21210

Net income = $161600

6 0
2 years ago
Some of the advantages of a functional project where the project is housed in a functional division include which of the followi
Ganezh [65]

Answer:

The correct answer is b. A team member can work on several projects.

Explanation:

Generally, there is a group of personnel who carry out repetitive tasks and can take over their functions without jeopardizing an improvement that is attempted. For this reason, the person in charge of the project can carry out several implementations without jeopardizing the normal development of the tasks, which allows covering broadly several areas and introducing best practices almost at the same time.

5 0
3 years ago
In most societies, resources are allocated by
Maksim231197 [3]
In most societies, resources are allocated by the combined action of millions of households and firms.
Resources are very important to setup and build societies. Resources are scare and this is the reason why societies and households faces many decisions. How societies manage scare resources, we study this in economics.
7 0
3 years ago
Preparing an Overhead Budget Patrick Inc. makes industrial solvents. Budgeted direct labor hours for the first 3 months of the c
Sergio [31]

Answer:

January:

Total overhead= $11,948

February:

Total overhead= $11,360

March:

Total Overhead= $13,302.5

Explanation:

Giving the following information:

Budgeted direct labor hours for the first 3 months of the coming year are:

January= 13,140

February= 12,300

March 15,075

The variable overhead rate is $0.70 per direct labor hour. Fixed overhead is budgeted at $2,750 per month.

To calculate the total overhead for each month, we need to sum the total variable overhead and the fixed overhead. <u>Total variable overhead is the result of applying the variable overhead rate multiplicated with the direct labor hour.</u>

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

January:

Total overhead= (0.70*13,140) + 2,750= $11,948

February:

Total overhead= (0.70*12,300) + 2,750= $11,360

March:

Total Overhead= (0,70*15,075) + 2,750= $13,302.5

3 0
3 years ago
Other questions:
  • During finals week, students arrive randomly at the help desk of the computer lab. There is only one technician due to budget cu
    5·1 answer
  • A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Any surrender fee imposed:__
    9·1 answer
  • During World War II, the price of rubber went up considerably. The rise in price stimulated research for alternatives. For examp
    15·1 answer
  • Clementine Company makes skateboards. They prepare master and flexible budgets and then perform variance analysis after the budg
    13·1 answer
  • Which of the following statements about a company’s realized strategy is true? A company’s realized strategy is usually kept sec
    10·1 answer
  • Which will help you when you file a claim for home insurance??
    7·2 answers
  • CHEMISTRY! I need help for this experiment as well.. What is the observation for that both on the table? ​
    10·1 answer
  • Give a minimum of three reasons why a cover letter is important
    9·2 answers
  • Highlight the difference between progressive and regressive tax.
    5·1 answer
  • How much total estimated warranty expense does arctica report for the current year?
    8·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!