Ezra runs a gyro stall at a farmers market

In its income statement for the year ended December 31, 2017, Darren Company reported the

Nesterboy [21]

Answer:

Part a

Darren Company

Multi-step income statement

Sales

Sales revenue $2,210,000

Less: Sales discounts ($160,000)

Net Sales $2,050,000

Cost of goods sold ($987,000)

Gross profit $1,063,000

Operating expenses

Salaries and wages expense $465,000

Depreciation expense $310,000

Utilities expense $110,000

Total operating expenses ($885,000)

Income from operations $178,000

Other revenues and gains

Interest revenue ($65,000)

Other expenses and losses

Loss on disposal of plant assets $83,500

Interest expense $71,000 ($89,500)

Income before income taxes $88,500

Income tax expense 25,000 28% ($25,000)

Net income $63,500

Part b

Darren Company

Profit margin = 3.10 % and gross profit rate = 51.85 %

Part c

Change in profit margin : The Profit Margin has fallen from 5% to 3.10 % in 2017 by 2.10% . The cause of this decline is a concern and must be investigated. The Profit margin rate measure the success with respect of earnings on sales thus more investigations must be done on what caused the earnings to decline in 2017.

Part 1

Cost of Goods Sold has increased by $28,000 ($1,015,000 -$987,000). Income tax rate has not changed.

a. Impact of the change on multi-step income statement

The items of Gross Profit and Income from Operations will decline by $28,000.

b. Impact of the change on profitability ratios

The Profit ratios will decline. Profit margin will be 1.73 %. Gross Profit margin will be 50.49 %

Explanation:

Multiple Step Income Statement shows separately the Operating Income and the Net Income. Operating Income being Income derived from Primary Activities of the Company whilst the Net Income includes the Secondary Activities of the Company such as Income taxes or Sale of assets.

Other Workings :

Profit margin = Net Income / Net Sales x 100

= $63,500 / $2,050,000 x 100

= 3.10 %

Gross Profit rate = Gross Profit / Net Sales x 100

= $1,063,000 / $2,050,000 x 100

=51.85 %

8 0

2 years ago

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has

PSYCHO15rus [73]

Answer:

= $132,000.

Explanation:

There are two types of fixed costs, general fixed cost and specific fixed cost.

General fixed costs are those that cannot be traced to a specific product rather they are incurred for the benefit of all of the product being produced. For example,the rent of the factory where three products are being produced

So they are unavoidable should a product be ceased for production that is they would still be incurred either way.

Specific fixed costs are those incurred specifically for a particular product and as such they would be saved should the product be discontinued. For example , if a special machine that cost $4000 a month to rent is used to produce a product. The $4000 would be saved should the production of the product ceases

The net operating cost of the company would increase by the amount of the avoidable specific fixed cost:

=$90,000 + $42,000

= $132,000.

3 0

3 years ago

Cleftell Inc., a coal mining company in the United States, is the only supplier of coal in its area. The company is backed by th

Katarina [22]

Answer:

Oligopoly

Explanation:

Oligopoly - it is referred to as a marketing structure in which there are few suppliers in the market and every supplier has its own unique function and unique control over the market.

In the given question, cleftell Inc is also one of that firm which has its own control over the market that is why government back them so that they will supply the coal in discounted rate as before

3 0

3 years ago

What is 44756 ÷167 long divison

Sliva [168]

44756 divided by 167 equals 268 with a remainder of 0

6 0

3 years ago

Define the concept management from functional perspective and clearly explain each of its

Wewaii [24]

Answer:

Management refers to the ability or art of setting objectives, organizing, motivating the people resources, devising systems of measurement, and building human capacity towards the attainment of all organization objectives.

Explanation:

1. Defining Objectives: This flows down from the Founder and Chief Vision Officer. The objectives of an organization is the purpose for which an organization was set up. An example could be to give people living with a disability the opportunity to live inclusively, attaining their highest selves.

2. Organizing: When objectives are taken and put in form of goals, these goals are devolved through to management in the form of achievable tasks who then delegate them to staff. The process of ensuring that each staff know their tasks, who they are accountable to, and work together harmoniously is called Organising.

3. Motivating team: It is not enough to have human resources. It is critical that they be willing to work together, harmoniously and happily. This way, the company enjoys the highest performance possible.

4. Defining Performance Indicators

What is not measured can not be managed. Performance Indicators are systems of measurement that enable the organization to keep track of whether or not the goals are being met and in what measure they are.

5. Building Capacity

Organizations that build leaders the fastest are the ones that win. Building human capacity is the equivalent of upgrading machinery or opting for higher manufacturing technology in the industrial age. People are able to solve problems to the extend that they know how to. The more they know, the better and faster they are at solving such problems. Hence, increasing organizational competency and effectiveness.

Cheers

3 0

3 years ago