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vlada-n [284]
3 years ago
10

Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells it

s product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows:
Required:
1. Calculate the following budgeted figures for 2022:
a. The total fixed cost.
b. The variable cost per unit sold.
c. The contribution margin per unit sold.
d. The break-even point in unit sales and dollar sales.
e. The margin of safety.
f. The degree of operating leverage
2. Prepare a budgeted variable costing income statement for 2022. Stop your computations at net operating income.
Business
1 answer:
elixir [45]3 years ago
4 0

Answer:

1. a. Total Fixed Cost $468,000

b. Variable cost per unit sold $1.25

c. Contribution margin per unit $10.5

d. Break even point in unit sales 44,571 units

e. Margin of Safety 10.8%

f. Degree of operating Leverage  2.3%

Explanation:

Margin of Safety :  Current sales in units - Break even Sales in units

Break even Point in unit sales  = Fixed cost / contribution margin

Degree of operating leverage = % change in operating leverage / % change in sales

{[667088 - 525218 ] / 667,088]} / {[55,000 - 50,000] / 55,000}

21 / 9.09 = 2.3%

Contribution Margin : Selling price per unit - Variable cost per unit

$32 - $21.5

2. <u>Income Statement 2022</u>

Sales 2,848,000

Cost of goods sold 1,998,732

Gross Margin 849,268

Selling and administrative cost 579,250

Operating profit 270,018

Interest Expense 9,642

Net profit 260,376

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Identify the internal control weakness in the following situations. State how the person can hurt the company.
Degger [83]

Answer:

Identification of the Internal Control Weaknesses:

A.  There is no segregation of duties and there is lack of access control.  Jerry Miller as a security guard is not expected to have a master key to the cash box.  With this he can pilfer the cash.  If he prepares the report that shows the number of cars that parked on the lot, he is not supposed to also prepare the day's cash receipts.  Otherwise, he can state any number of cars as parked that he likes, and which corresponds to the cash he might leave in the Cash box since he also has a master key.

B.  There is no segregation of duties and there is lack of supervision,  proper reconciliations, and assets audit.  Sharon Fisher handles purchase transactions from the beginning to the close all alone with a third party.  This exposes the company to procurement frauds and collusion with suppliers.  She can purchase assets for the company at prices that would enrich her personally.

C. Forming an audit opinion on the basis of ratio analysis of last year's comparative financial statements exposes the company to audit risks.  While ratio analysis is part of the basis for forming audit opinions, it is surely not the first audit procedure to obtain audit evidence to support his audit opinion on the financial statements.  An auditor is expected to obtain sufficient audit evidence and perform audit substantive tests of financial statement assertions.  He or she is also expected to review the internal control system to ensure that it is operating effectively after establishing its existence and reviewing changes in internal controls.

Explanation:

Internal Controls are controls established by management in order to help it achieve business goals.  There are many internal controls, including Separation of Duties, Access Controls , Authorization and Approvals, Asset Audits, Reconciliations, and Data Backups.  The purposes of internal controls are to establish the reliability of financial reporting, ensure timely feedback on the achievement of operational or strategic goals, and achieve compliance with financial management laws, and accounting regulations.

4 0
3 years ago
Chicago Company has a subsidiary in Germany where it generates large profits. The subsidiary remits most of its earnings to the
matrenka [14]

Answer:instructing the German subsidiary to borrow euros from a bank in Germany

Explanation:A company may organize subsidiaries to keep its brand identities separate. This allows each brand to maintain its established goodwill with customers and vendor relationships. Subsidiaries can also help you position part of your business as an alternative to the parent company at a different price point.

The Chicago Company will instruct the German subsidiary to lend Euro from bank in Germany.

6 0
3 years ago
Read 2 more answers
The new growth theory states that A. technological advances are the responsibility of the government. B. the subsistence level i
EleoNora [17]

Answer:

C. technological advances are the result of discoveries and choices.

Explanation:

The new growth theory was developed by a man named med Paul Romer. This new growth theory stresses the role which is determined by human choices.

The new growth theory states that technological advances are the result of discoveries and choices, rather than random choices. It explains the fact that new innovations and technological advancement are not the result of random chance, but they occur as a result of humans and their desire for new innovations.

Therefore option C is correct

7 0
2 years ago
The Baldwin Company currently has the following balances on their balance sheet: Total Assets $256,555 Total Liabilities $149,32
algol [13]

Answer: $80,242

Explanation:

Common stock = Assets - Liabilities - Retained earnings

Assets next year = 256,555 + 55,000

= $311,555

Liabilities remain unchanged.

Retained earnings

= Opening retained earnings + Net income - dividends

= 49,793 + 44,200 - 12,000

= $‭81,993‬

Common stock next year;

= 311,555 - 149,320 - 81,993

= $80,242

8 0
2 years ago
Outdoor Company expects to sell 7 comma 500 units for $ 175 each for a total of $ 1 comma 312 comma 500 in January and 2 comma 5
nikitadnepr [17]

Answer and  Explanation:

The preparation is presented below:

                              Outdoor Company

               Inventory, Purchases, and Cost of Goods Sold Budget    

             Two months Ended January 31 and February 28

Particulars              January          February March

Sales in units         7,500 units      2,500 units   4,700 units

Sales price         $175                 $195              $270

Sales in dollars $1,312,500      $487,500       $1,269,000

Percentage of cost of goods sold 60%   60% 60%

Cost of goods sold $787,500      $292,500 $761,400

Add: Desired ending merchandise inventory $185,500 466,840

    ($292,500 × 60% + $10,000)        ($761,400 × 60% + $10,000)

Total merchandise inventory required $973,000   $759,340

Less: Beginning merchandise inventory $482,500  $185,500

                        ($787,500 × 60% + $10,000)

Budgeted purchases $490,500  $573,840

The ending inventory of month of Jan should be beginning inventory of Feb and the same is shown above

         

6 0
3 years ago
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