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tino4ka555 [31]
4 years ago
7

In April, Holderness Inc, a merchandising company, had sales of $251,000, selling expenses of $17,000, and administrative expens

es of $28,000. The cost of merchandise purchased during the month was $161,000. The beginning balance in the merchandise inventory account was $37,000 and the ending balance was $51,000. Required: Prepare a traditional format income statement for April.

Business
1 answer:
Rainbow [258]4 years ago
3 0

Answer:

The net income is $59,000

Explanation:

Please refer to the attached file for calculation.

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Answer :

Advantage = $3

Explanation :

As per the data given in the question,

Particulars                     Manufacturing                          buying

Purchase from outside suppliers                                  $15

Direct material                    $7

Direct labor                        $5

Variable manufacturing overhead $2

Fixed manufacturing overhead $4

Total cost                          $18                                              $15

Fixed manufacturing overhead = $5 × 80% = $4

Since it give the net advantage of $3

Hence, Supler Corporation should purchase from the outside supplier.

We compare the manufacturing and buying cost and according to the cost we take the decision. As we can see that the buying cost is less than the manufacturing cost so it would give the advantage of $3

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