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avanturin [10]
3 years ago
9

Concord Inc. had beginning inventory of $11,900 at cost and $21,000 at retail. Net purchases were $140,679 at cost and $183,000

at retail. Net markups were $10,900, net markdowns were $7,500, and sales revenue was $132,700. Compute ending inventory at cost using the conventional retail method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)
Business
1 answer:
trasher [3.6K]3 years ago
6 0

Answer:

See

Explanation:

Retail inventory - Conventional method

Cost Retail

Beginning inventory 11,900 21,000

Purchases 140,679 183,000

Add: Mark up --- 10,900

Current year addition 140,679 193,900

Goods available for sale 152,579 214,900

Less: Mark down ----- 7,500

Sales ----- 132,700

Ending inventory retail ----- 74,700

Ratio of goods available for sale (152,579/214,900) 71%

Ending inventory 53,037

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Farr Industries Inc. manufactures only one product. For the year ended December 31, the contribution margin increased by $560,00
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Answer:

Farr Industries Inc

            Contribution Margin Analysis

Planned Contribution Margin                                                   $5,200,000.00

Effect of change in sales:

Sales quantity factor                                                                                            (120,000-130,000)x$220                      ($2,200,000)

Unit price factor                                                                                                                ($250 - $220)x120,000                         $3,600,000

Total effect of change in sales                                                 $1,400,000.00

<em>Effect of changes in variable cost of goods sold: </em>

Variable cost quantity factor                                                                                        (130,000-120,000)x $165                    $1,650,000.00

Unit cost factor                                                                                                                   ($180-165) x 120,000                          ($1,800,000.00)

Total effect of changes in                                                                                           variable cost of goods sold                                                      ($150,000.00)

<em>Effect of changes in variable selling and administrative expenses: </em>

Variable cost quantity factor                                                                                                  (130,000-120,000)x $15                   $150,000.00

Unit cost factor                                                                                                   ($22-$15)x 120,000 units                 ($840,000.00)

Total effect of changes in

variable selling and administrative expenses                           ($690,000.00)

Actual contribution margin                                                       $5,760,000.00

I disagree with the President, seeing as though we see that the majority of the decrease in the variable cost of the products sold is due to the variable cost factor and also to the variable sales and administrative expenses because the company made additional sales efforts to stay competitive at increased prices

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Answer:

BEP 2016: $ 1,700,000

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under proposition a)

contribution margin:

(2,310,000 * 1.25 - 924,000) / 2,310,000 * 1.25 = 1,500,000

under porposition b)

fixed cost decrease by: 197,000 - 40,000 = 157,000

contribution margin decrease by 5% to 55%

(1,020,000 - 157,000) / (0.6 - 0.05) = 1,569,090.90

under proposition c)

We distrubute the same cost but now 50% is fixed and 50% variable:

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contribution margin:

2,310,000 - 927,000 = 1,383,000

ratio: 1,383,000 / 2,310,000 = 0.5987

BEP

927,000 / 0.5987 = 1,548,354.77

Explanation:

Break even point formula:

\frac{Fixed\:Cost}{Contribution \:Margin \:Ratio} = Break\: Even\: Point_{dollars}

Where:

\frac{Contribution \: Margin}{Sales \: Revenue} = Contribution \: Margin \: Ratio

Sales \: Revenue - Variable \: Cost = Contribution \: Margin

Sales: 2,310,000

Variable cost: 924,000

Contribution: 2,310,000 - 924,000 = 1,386,000

Contribution ratio: 1,386,000 / 2,310,000 = 0.6

Fixed cost: 1,020,000

BEP 2016

1,020,000 / 0.60 = 1,700,000

6 0
3 years ago
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