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ADM 2341 Study Guide - Midterm Guide: Gross Margin, Income Statement, Fixed Cost

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skycricket871
23 Sep 2015
School
University of Ottawa
Department
Administration
Course
ADM 2341
Professor
Tiemei L I

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Document Summary

The books of robin williams company, wholesalers of hand-held calculators, reflected the following revenues and expenses for various months during the year ended july 31, 2013. Identify the above expenses as variable, fixed, or mixed: separate each mixed expense into variable and fixed expense by using the high-low methods. State the cost formula for each mixed expense: prepare a contribution income statement for the month of june. Print inc. , of ottawa, producers of finance and accounting books, reflected the following information at december 31, 2012, and 2013. Manufacturing overhead consists of both variable and fixed cost elements. Management wants to determine the overhead breakdown between variable and fixed cost per year. For both years, determine total manufacturing overhead costs: determine the cost formula for manufacturing overhead by means of the high-low method of cost analysis. Express the variable portion in terms of variable cost per unit of production.

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Related Questions

The following are comparative balance sheets and an income statement for Wentworth Company.

Wentworth Company

Balance Sheets

As of December 31

Assets 2013 2012

Cash $21,500 $120,000

Accounts receivable 195,000 105,000

Inventory 180,000 225,000

Long-term investments 0 60,000

_______ _________

Totals $396,500 $510,000

Liabilities and shareholders’ equity

Accounts payable $75,000 $120,000

Operating expenses payable 24,000 15,000

Bonds payable 70,000 100,000

Common stock 125,000 125,000

Retained earnings 102,500 150,000

________ _________

Totals $396,500 $510,000

Wentworth Company

Income Statement

For the Year Ended December 31, 2013

Sales $560,000

Cost of goods sold:

Beginning Inventory $225,000

Purchases 30,000

________

Goods Available for Sale 555,000

Less: ending inventory 180,000

_________

Cost of goods sold 375,000

________

Gross Profit 185,000

Operating expenses 180,000

_________

Income from Operations 5,000

Other expenses:

Loss on sale of long-term investment (7,500)

_______

Net loss $ (2,500)

Cash dividends of $45,000 were paid in 2013.

Required:

Prepare a statement of cash flows for 2013 using the direct method.

Financial data of Fancy Footwork Company for 2013 and 2012 arepresented below.

FANCY FOOTWORK COMPANY

COMPARATIVE BALANCE SHEET

AS OF DECEMBER 31, 2013 AND 2012

2013

2012

Cash

$ 260,000

$ 230,000

Receivables

$ 156,000

$ 120,000

Inventory

$ 180,000

$ 220,000

Plant assets

$ 160,000

$ 135,000

Accumulated depreciation

$ (80,000)

$ (76,000)

Long-term investments (held-to-maturity)

$ 80,000

$ 93,000

$ 756,000

$ 722,000

Accounts payable

$ 135,000

$ 122,000

Accrued liabilities

$ 30,000

$ 33,100

Bonds payable

$ 135,000

$ 166,000

Common stock

$ 180,000

$ 165,000

Retained earnings

$ 276,000

$ 235,900

$ 756,000

$ 722,000

FANCY FOOTWORK COMPANY

INCOME STATEMENT

For the year ended Dec 31, 2013

Sales

750000

Cost of Goods Sold

530000

Gross Margin

220000

Selling and administrative expenses

106000

Income from Operations

114000

Other revenues and gains

Gain on sale of investments

7000

Income before tax

121000

Income tax expense

48400

Net Income

72600

Additional information:

During the year, $9000 of common stock was issued in exchangefor plant assets. No plant assets were sold in 2012. Cash dividendswere $32500.

Required:

A) Prepare a statement of cash flows using the indirectmethod.

B) Prepare a statement of cash flows using the direct method.(Do not prepare a reconciliation schedule.)

Condensed financial data of Pat Metheny Company for 2014 and2013 are presented below.

PAT METHENY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2014 AND 2013

2014

2013
Cash

$1,799

$1,096
Receivables

1,757

1,310
Inventory

1,592

1,918
Plant assets

1,898

1,696
Accumulated depreciation

(1,194

 )

(1,166

 )
Long-term investments (held-to-maturity)

1,295

1,474

$7,147

$6,328
Accounts payable

$1,206

$799
Accrued liabilities

213

243
Bonds payable

1,420

1,643
Capital stock

1,903

1,697
Retained earnings

2,405

1,946

$7,147

$6,328

PAT METHENY COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014

Sales revenue

$6,819
Cost of goods sold

4,705
Gross margin

2,114
Selling and administrative expenses

931
Income from operations

1,183
Other revenues and gains
Gain on sale of investments

95
Income before tax

1,278
Income tax expense

549
Net income $729
Cash dividends

270
Income retained in business

$459


Additional information:

During the year, $74 of common stock was issued in exchange forplant assets. No plant assets were sold in 2014.

Prepare a statement of cash flows using the indirect method.