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My name is Ann [436]
3 years ago
7

The Parsons Company experienced the following costs in 2007: Direct materials $4.50/unit Direct labor $8.00/unit Manufacturing O

verhead Costs Variable $2.00/unit Fixed $150,000 Selling & Administrative Costs Fixed selling $15,000 Variable selling $1.50/unit Fixed administrative $10,000 During the year the company manufactured 60,000 units and sold 55,000 units. If net income for the year was $114,000 using full costing, what would net income be if the company used variable costing? Assume no beginning inventories. $94,000 $134,000 $126,500 $101,500
Business
1 answer:
Delicious77 [7]3 years ago
5 0

Answer:

$101,500

Explanation:

The computation of the net income under the variable costing is shown below:

= Net income + opening inventory - closing inventory

where,

Net income is $114,000

Opening inventory is zero

And, the closing inventory is not given, so we have to compute it

Since the company manufactured 60,000 units and sold 55000 units so, the remaining inventory would be considered as closing units i.e $5,000 (60,000 units - 55,000 units)

Now the fixed manufacturing overhead will be computed for 5,000 units. The calculation is shown below:

= (Fixed manufacturing overhead) × (closing units ÷ number of units manufactured)

= $150,000 × (5,000 units ÷ 60,000 units)

= $12,500

Now put these values to the above formula  

So, the value would equal to

= $114,000 + $0 - $12,500

= $101,500

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Answer:

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3 0
3 years ago
At the beginning of Year 2, Oak Consulting had the following normal balances in its accounts:
kvv77 [185]

Answer:

    Cash                                                  Accounts receivable

    debit              credit                          debit              credit

    42,000                                              25,000

c.  140,000                                       a.   185,000

d.                        120,000                 <u>c.                         140,000</u>  

<u>e.                        31,400   </u>                      70,000

    30,600

    Service revenue                               Accounts payable

    debit              credit                          debit              credit

a.                         185,000                                            8,400

    <u>185,000                       </u>                b.                        45,800

       0                     0                        <u>e.   31,400                      </u>

                                                                                    22,800

    Common stock                                 Retained earnings

    debit              credit                          debit              credit

   <u>                        24,000</u>                                              34,600

                           24,000                  f.   10,000

                                                              <u>                        19,200</u>

                                                                                      43,800

    Operating expenses                        Salaries expenses

    debit              credit                          debit              credit

b.  45,800                                         d.  120,000                  

<u>                            45,800</u>                       <u>                      120,000</u>

       0                      0                                  0                    0                      

in order to determine the balance of the retained earnings account at the end of the year, we must first close all the temporary accounts:

Dr Service revenue 185,000

    Cr Income summary 185,000

Dr Income summary 165,800

    Cr Operating expenses 45,800

    Cr Salaries expense 120,000

Dr Income summary 19,200

    Cr Retained earnings 19,200

6 0
3 years ago
During the adjusting process two transactions were missed. The first is for unearned rent revenue of which $450 was earned durin
masya89 [10]

Answer:

3. net income is understated by $175

Explanation:

There were two transactions omitted. The first transaction is unearned rent revenue of which $450 was earned. This earned rent revenue increases income by $450. While the second transaction was accrued interest payable of which $275 is owed. This interest payable increases liabilities by $275.

Therefore, from the above, income or revenue is understated by $450, while expenses is understated by $275.

Therefore, net income is understated by income less expenses, thus 450 - 275 = $175. This also implies that liabilities are overstated by $175.

4 0
3 years ago
Pro forma balance sheet Peabody &amp; Peabody has 2019 sales of $10 million. It wishes to analyze expected performance and finan
zysi [14]

Answer:

Peabody & Peabody

a. Peabody & Peabody

Pro Forma Balance Sheet

December 31, 2021 ($000)

Cash                             480

Marketable securities 200

Accounts receivable 1,440

Inventories                2,160

Total current assets 4,280

Net fixed assets       4,820

Total assets              9,100

Liabilities and Stockholders equity:

Accounts payable          1,680

Accruals                           500

Other current liabilities     80

Total current liabilities 2,260

Long-term debt           2,000

Total liabilities             4,260

Common equity         3,900            

Total liabilities and stockholders’ equity $8,160

Required Finance         940

b. From the statement prepared in part a, it is clear that Peabody & Peabody requires new financing of $940,000 for 2020 to meet the projected assets base.

Explanation:

a) Data and Calculations:

2019 Sales = $10 million

Pro Forma Balance Sheet

December 31, 2017 ($000)

Assets:

Cash                             400

Marketable securities 200

Accounts receivable 1,200

Inventories                1,800

Total current assets 3,600

Net fixed assets       4,000

Total assets              7,600

Liabilities and Stockholders equity:

Accounts payable          1,400

Accruals                           400

Other current liabilities     80

Total current liabilities  1,880

Long-term debt           2,000

Total liabilities              3,880

Common equity           3,720

Total liabilities and stockholders’ equity $7,600

Purpose: To analyze expected performance and financing needs for 2021.

1. Percent of Sales ($12 million)

Accounts receivable, 12%  $1,440

Inventory, 18%                    $2,160

Accounts payable, 14%      $1,680

Net profit margin, 3%          $360

2. Market securities            $200

3. Cash balance (desired minimum) $480

4. Net fixed assets           4,000

New equipment in 2020    650

Depreciation, 2020           (290)

New equipment in 2021    850

Depreciation, 2021            (390)

Net fixed assets            $4,820

5. Accruals                       $500

8. Dividend payout = 50% of $360 = $180

Retained Earnings (current) = $180

Common Equity:

2019    3,720

Income   180 (Retained Earnings)

2020  3,900

5 0
3 years ago
Sage Company had cash receipts from customers in 2020 of $137,920. Cash payments for operating expenses were $84,990. Sage has d
Triss [41]

Answer:

sales revenue for the period: $  143,900

operating expenses:               $   78,000

Explanation:

We solve for sales using the account recievable identity:

beginning account receivable + sales - collection = ending account receivable

12,330 + sales - 137,920 = 18,310

sales = 137,920 + 18,310 - 12,330 = 143,900

Then, for operating expenses, we have a prepaid expenses thus unexpired and therefore, not expenses under accrued accounting.

we solve like this:

beginning prepaid expenses    19,800

payment on expenses              84,990

total expenses payment          104,790

We now subtract the prepaid (unexpired) to get the amount accrued for the period:

104,790 - 26,790 = 78,000

4 0
3 years ago
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