ADMS 2510 Study Guide - Midterm Guide: Customer Service, Profit Margin
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Using the below financial statements, determine certainnumber of variable costs and a fixed costs for the month of Dec.2016 and calculate the following:
Breakeven point in units
Breakeven point in $S
Assume a target income and determine how many units you need tosell in order to make your target income.
LINDSEY’S LIP SETS
Schedule of Cost of Goods Manufactured
For the Year Ending December 31, 2016
Direct Materials: | |||
Beginning Raw Materials Inventory, Jan. 1 | $100,000 | ||
Plus: Net purchases of raw material | $200,000 | ||
Raw materials available | $300,000 | ||
Less: Ending raw materials inventory, Dec. 31 | $150,000 | ||
Raw materials transferred to production | $150,000 | ||
Direct Labor | $200,000 | ||
Manufacturing Overhead | |||
Indirect materials | $10,000 | ||
Indirectlabor | $45,000 | ||
FactoryDepreciation | $10,000 | $65,000 | |
Total manufacturing costs | $415,000 | ||
Beginning work in process inventory Jan.1 | $50,000 | ||
Cost of goods manufactured | $530,000 | ||
Less: Ending work in process inventory, Dec. 31 | $2,000 | ||
Cost of goods manufactured | $528,000 |
LINDSEY’S LIP SETS
Schedule of Cost of Goods Sold
For the Year Ending December 31 2016
Beginning finished goods inventory, Jan. 1 | $20,000 |
Plus: Cost of goods manufactured | $528,000 |
Goods available forsale | $548,000 |
Less: Finished goods inventory, Dec. 31 | $10,000 |
Cost of goodssold | $538,000 |
LINDSEY’S LIP SETS
Income Statement
For the Year Ending December 31 2016
Sales | $3,200,000 | ||
Cost of goods sold | $538,000 | ||
Gross profit | $2,662,000 | ||
Operating expenses | |||
Online shop selling | $24,000 | ||
General administrative | $10,000 | $34,000 | |
Net income | $2,628,000 |
Kool-Air, Inc. Income Statement August 31, 200x | ||
Sales | $950,000 | |
Less: | ||
Raw materials balance @ August 1, 200x | $25,000 | |
Wages – product assembly labor | 150,000 | |
Product painting and finishing wages | 120,000 | |
Advertising expense | 90,000 | |
Selling and administrative expenses | 75,000 | |
Rent on factory facilities | 60,000 | |
Rent on the corporate office complex | 18,500 | |
Finished Goods Inventory @ August 1, 200x | 30,000 | |
Depreciation on sales equipment | 45,000 | |
Depreciation on production equipment | 30,000 | |
Accrued liabilities | 125,000 | |
Plant security wages | 10,000 | |
Purchases of direct material during the month | 225,000 | |
Production supervisor’s salary | 18,000 | |
Factory utilities | 12,000 | |
Factory cafeteria wages | 21,000 | |
Work-in Process Inventory @ August 1, 200x | 16,000 | |
Factory insurance | 8,000 | 1,078,500 |
Net Loss | ($128,000) |
August 31, 200x | |
Raw Materials Inventory | $22,000 |
WIP Inventory | 14,000 |
Finished Goods Inventory | 40,000 |
By the way, according to Bob, the company’s manufacturingoverhead cost should be applied to production at a rate of 55% ofDirect Labor cost.
Using the additional information provided below:
1.Prepare a schedule of cost of goods manufactured for the monthending August 31, 200x.
2.Prepare a corrected income statement for the month endingAugust 31, 200x.