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
alexdok [17]
3 years ago
12

Below is Salem Company’s income statement for 2019 that was prepared by an inexperienced accountant.

Business
1 answer:
Viktor [21]3 years ago
5 0

Question Completion:

Research and development expense………………….…….. 4,750

Prepaid advertising …….…………………………………. 3,000

Indirect manufacturing labor cost..………………………… 16,200

Utilities expense..…. .....................………………………… 10,200

Direct manufacturing labor cost. ………………………..… 41,000

Factory equipment………………………………………….. 40,000

Insurance expense…………………….………………. …… 3,500

Restructuring costs………………………………………….. 4,000

Direct materials purchased………………………………..... 93,000

Interest expense……………………………………………. 1,750

Rent expense…..…………….………………. …………….. 18,000

Other factory indirect costs…………………………………. 3,000

Dividend paid………………………………………………. 1,500

Administrative expenses………………….…………………. 40,400

Short-term investment……………………………………… . 19,000

Total operating expenses …………………………………….. 331,550

Net operating loss …………………………………………….. ($10,800)

a. Seventy percent (70%) of utilities expense and 80% of insurance expense are for factory operations. Apply the remaining utilities and insurance expenses equally to selling expense and administrative expenses.

b. Sixty percent (60%) of the rent expense is associated with factory operations. Allocate the remaining rent equally to selling expense and administrative expenses.

c. Factory equipment was purchased January 1, 2017. It was estimated that the useful life of the equipment is 10 years and the residual value, $4,000. The $10,000 accumulated depreciation above is for 2017. No depreciation was charged for 2018. The company uses the double-declining balance method of depreciation.

d. Inventory balances are:   January 1, 2018      December 31, 2018

Direct materials……………… $5,000                                $6,600

Work-in-process ……………..$8,000                               $10,000

Finished goods ……………$25,000                              $28,000

e. The company’s tax rate is 21%. The president is disappointed with the results of operations and has asked you to review the income statement and make a recommendation as to whether the company should look for a buyer for its assets. Required:

1. As one step in gathering data for the president, prepare a corrected schedule of cost of goods manufactured for the year ended December 31, 2018.

2. As a second step, prepare a new multiple-step income statement for the year ended December 31, 2018.

3. Calculate the cost of producing one unit if the company produced 120,000 units in 2018 (round your answer to two decimal points).

Answer:

Salem Company

Income Statement

For the year ended December 31, 2019

Description Reference Amount ($) Amount ($)

Sales Revenue A                            298,000.00

Cost of goods Sold:    

Purchases - Change in Inventory      6,600.00  

Direct Materials purchased           93,000.00  

Direct Manufacturing labor cost    41,000.00

Manufacturing Costs:  

Utilities Exp (70%)     7,140.00  

Insurance Exp (80%)       2,800.00  

Rent Exp (60%)  10,800.00 20,740.00  

Total Cost of Goods Sold             161,340.00

Gross Profit                                      $136,660.00

   

Operating Expenses:    

Indirect Manufacturing labor cost  16,200.00  

Other factory indirect cost     3,000.00  

Selling Expenses                  32,250.00  

Utilities Exp (15%)                     1,530.00  

Insurance Exp (10%)               350.00  

Rent Exp (20%)                   3,600.00  

Administrative Exp                 40,400.00  

R&D Expenses                   4,750.00  

Restructuring cost                   4,000.00  

Depreciation                              7,200.00  

Total Operating Expense             118,760.00

Operating Income                                   $17,900.00

Non - Operating Expenses:    

Interest Exp        1,750.00  

Dividend Paid        1,500.00  

Total Non- Operating Expense     (3,250.00 )

Non-operating / Other Income    

Gain on sale of investment             5,250.00

Total Non- Operating Income    

Net Income before tax                           19,900.00

Tax at 21%                                             4,179.00

Net Income after taxes                   $15,721.00

3. Assume company produced 120,000 units for year 2018, then cost per unit would be

Total cost of goods sold = $ 161,340 divided by 120,000 units

= $ 1.34 per unit

Explanation:

a) Data and Calculations:

Salem Company

Income Statement

As of December 31, 2019

Revenues:

Sales revenue ……………..……………………………………​ $298,000

Wages payable…………..………………………………………..​ 4,000

Gain on sale of investment…………………………………….. 5,250

Deferred revenue………………………………………………. 2,500

Interest payable………………………………………………… 1,000

Accumulated depreciation……………………………………… 8,000

Total revenues …………………………………………………..​ $318,750

Less operating expenses:

Selling expenses….……………………… …………………. $32,250

Research and development expense………………….…….. 4,750

Depreciation=  (40000-4000)*(100%/10yrs*2)  = $7,200.00

You might be interested in
The selection of the factory overhead allocation method is important because the method selected determines the accuracy of the
rusak2 [61]
If this is a true or false question, then yes, it is <u>true</u> that the selection of the factory overhead allocation method is important because the method selected determines the accuracy of the product cost.It is important to determine the appropriate method to allocate overhead in a certain factory so as to ensure that the cost of a product is suitable and accurate.
6 0
3 years ago
kendra always buys and uses wilson brand tennis balls. if she finds a penn or dunlop ball on the court, she gives it away. brand
Dmitry [639]

Considering the situation above, by building a strong brand, Wilson has effectively "<u>reduced the price elasticity of demand for its products</u>."

This is because the price elasticity of demand is a term in economics that defines the sensitivity of the quantity demanded of a commodity to its price.

Usually, the price elasticity of demand shows that when the price of a commodity increase, the quantity demanded decreases.

Thus, in this case, since it is said that Kendra allowed Wilson to charge a higher price and not lose many sales, therefore, Wilson has been able to reduce the price elasticity of demand for its products.

Learn more here: brainly.com/question/15654343

4 0
2 years ago
Sheldon Company began Year 1 with $1,600 in its supplies account. During the year, the company purchased $4,700 of supplies on a
Annette [7]

Answer:

$2700 supplies in hand

$3600 Supplies expense

Explanation:

As you can see in question data Sheldon has already counted the supplies in hand so, we only have to calculate supplies expense by doing some minor workings

WORKINGS

Supplies Expense = Opening + purchases - payment made

Supplies Expense = $1600 + $4700 - $2500

Supplies Expense = $3600

8 0
3 years ago
Assume that you are a project manager who has to deliver a poster to a client in four days. Write a report on the tasks that you
sdas [7]

As a project manager, firstly create a plan for the project idea,  then Build and Manage the Dream Team for the poster, Manage the Money. Resolve Emerging Issues which occurring during the poster making.

<h3>What do project manager's key roles and responsibilities?</h3>

Project managers take the lead in organizing, carrying out, overseeing, controlling, and wrapping up projects.

They are supposed to keep everyone informed and pleased while completing a project on schedule, within their allocated budget, and according to the project brief.

Thus, As a project manager, firstly create a plan for the project idea,

For more details about project manager's key roles and responsibilities, click here:

brainly.com/question/15049524

#SPJ1

6 0
2 years ago
Why do larger countries tend to have lower ratios of international trade to gdp than smaller countries?
hjlf
Answer: due to lack of money in small countries

Explanation:

4 0
1 year ago
Other questions:
  • Determine the amount to be paid in full settlement of each invoice, assuming that credit for returns and allowances was received
    15·1 answer
  • When labor unions successfully bargain for wage rates that are _____ the equilibrium wage rate, they may cause _____. higher tha
    15·1 answer
  • Question A
    14·1 answer
  • Brainliest! What three institutions influence economics the most? Explain how each influences economics and provide examples of
    15·2 answers
  • Which of the following is not a generally accepted accounting principle relating to the valuation of assets? The going-concern a
    13·1 answer
  • Bruce is a single father with 1 child. He can work as a bagger at the local grocery store for $6 per hour up to 1,200 hours per
    8·1 answer
  • In economics, the term productivity refers to:
    6·1 answer
  • What financial behaviors will typically lead to a low credit score?
    12·2 answers
  • Costs associated with two alternatives, code-named Q and R, being considered by Albiston Corporation are listed below: Alternati
    8·1 answer
  • HELP!!!!!
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!