BIG APPLE DESIGN COMPANY Income Statement For the Month Ended March 31 Sales revenue $300,000 Cost of services billed 255,000 Gross margin . $ 45,000 Marketing and administrative costs 30,000 Operating profit . $ 15,000 The controller provided the following customer-profitability graph: BIG APPLE DESIGN COMPANY Customer-Profitability Graph For the Month Ended March 31 $$8,000 8,000 7,000 6,000 $5,500 5,000 $4,500 $4,000 4,000 3,000 2,000 1,000 6 Customer number 1 2 3 4 -1,000 -2,000 -$2,000 -3,000 -4,000 -5,000 -$5,000 Operating income

BIG APPLE DESIGN COMPANY Income Statement For the Month Ended March 31 Sales revenue $300,000 Cost of services billed 255,000 Gross margin . $ 45,000 Marketing and administrative costs 30,000 Operating profit . $ 15,000 The controller provided the following customer-profitability graph: BIG APPLE DESIGN COMPANY Customer-Profitability Graph For the Month Ended March 31 $$8,000 8,000 7,000 6,000 $5,500 5,000 $4,500 $4,000 4,000 3,000 2,000 1,000 6 Customer number 1 2 3 4 -1,000 -2,000 -$2,000 -3,000 -4,000 -5,000 -$5,000 Operating income

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 26BEA

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Biblio Files CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8 Sales $379,000 Variable costs: Manufacturing expense $151,600 Selling expense 15,160 Administrative expense 60,640 (227,400) Contribution margin $151,600 Fixed costs: Manufacturing expense $76,750 Selling expense 8,000 Administrative expense 10,000 (94,750) Operating income $56,850 Sales Mix Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type ofBookshelf Sales Priceper Unit Variable Costper Unit Basic $5.00 $1.75 Deluxe 9.00 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called…
Biblio Files CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8 Sales $379,000 Variable costs: Manufacturing expense $151,600 Selling expense 15,160 Administrative expense 60,640 (227,400) Contribution margin $151,600 Fixed costs: Manufacturing expense $76,750 Selling expense 8,000 Administrative expense 10,000 (94,750) Operating income $56,850 Sales Mix Biblio Files Company is making plans for its next fiscal year, and decides to sell two new types of bookshelves, Basic and Deluxe. The company has compiled the following estimates for the new product offerings. Type ofBookshelf Sales Priceper Unit Variable Costper Unit Basic $5.00 $1.75 Deluxe 9.00 8.10 The company is interested in determining how many of each type of bookshelf would have to be sold in order to break even. If we think of the Basic and Deluxe products as components of one overall enterprise product called…
The most recent monthly income statement for Headphones Manufacturing Company is given below: Department A Department B (S) 600,340 Total (S) 1,006,990 (S) Sales 406,650 Variable expenses Contribution margin Traceable fixed expenses Segment margin Common fixed expenses Net operating income 256.530 420.000 180,340 676,530 150,120 330,460 100,000 50,120 200.000 (19,660) 300,000 30,460 20.870 29.130 50,000 29,250 (48,790) (19,540) Due to its poor result, consideration is being given to closing Department B. Studies show that if Department B is closed, 20% of its traceable fixed expenses will continue unchanged. The studies also show that closing Department B would result in a 5 percent decrease in sales in Department A. The company allocates common fixed expenses to the departments on the basis of sales dollars. Required: c) The company has done a detailed investigation to the production in Department A. Currently, department produces 4 products as follow: A B Selling price per unit…
Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.
The most recent monthly income statement for Your Company 1s given below: total store 1 store 2 Sales $2,100,000 $1,300,000 $800,000 VC $1,260,000 $882,000 $378,000 CM $840,000 $418,000 $422,000 Traceable fixed costs $420,000 $231,000 $189,000 Segment margin $420,000 $187,000 $233,000 Common fixed costs $350,000 $210,000 $140,000 $70,000 ($23,000) $93,000 NI Your Company is considering closing Store I. If Store I is closed, one-fourth of its traceable fixed expenses would continue to be incurred. Also, the closing of Store I would result in a 20% decrease in sales in Store II. Your Company allocates common fixed expenses on the basis of sales dollars and none of these costs would be saved if a store were shut down. What is the increase or (decrease) in the net income if Store I is closed? enter an increase as a positive number and a decrease as a negative number.
Suresh Company reports the following segment (department) income results for the year. Department M Department N Department O Department P Department T Total Sales $ 77,000 $ 39,000 $ 70,000 $ 56,000 $ 38,000 $ 280,000 Expenses Avoidable 14,800 42,400 21,600 19,000 46,800 144,600 Unavoidable 55,800 18,600 5,200 43,200 16,800 139,600 Total expenses 70,600 61,000 26,800 62,200 63,600 284,200 Income (loss) $ 6,400 $ (22,000) $ 43,200 $ (6,200) $ (25,600) $ (4,200) b. Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated.
Problem 1. Better Man Company reported the following information on its income statement for the first quarter of the year. January Php 375,000 32,000 12,000 March Eebruary Php 750,000 Sales Sales Returns & Allowances Sales Discounts Net Sales Php 25,000 15,000 9,000 736,000 255,000 Cost of Sales Gross Profit 620,000 185,000 310,000 Required: Calculate the missing information.
Biblio Files CompanyContribution Margin Income StatementFor the Year Ended December 31, 20Y8Sales $379,000 Variable costs: Manufacturing expense$151,600 Selling expense15,160 Administrative expense60,640(227,400) Contribution margin $151,600 Fixed costs: Manufacturing expense$76,750 Selling expense8,000 Administrative expense10,000(94,750)Operating income $56,850
Please help with the income statement based on info below: Pricing Actual # Revenue Grooming 25 4 3,000 Daycare 18 22 11,880 Boarding 25 12 9,000 Total January Revenue 23,880
Lakeshore Manufacturing provided the following information for the month ended March 31: Sales Revenue $31,000 Beginning Finished Goods Inventory 7,000 Ending Finished Goods Inventory 8,500 Cost of Goods Manufactured 11,600 Compute gross profit. OA. $19,400 OB. $17,900 OC. $10,900 O D. $20,900 ***
< Revenues Cost of goods sold Gross profit Gross profit as a percent of sales Customer 1 $130,000 Customer 2 000 $210,000 (113,400) $96,600 (81,900) $48,100 Activity Base Number of bid requests Number of shipments Number of standard items ordered Number of nonstandard items ordered Revenues 37% The administrative records indicated that the activity-base usage quantities for each customer were as follows: 15 25 46% 20 Customer 1 Customer 2 Customer 3 6 40 Customer 3 55 35 $180,000 (90,000) $90,000 65 50% 60 50 52 85 a. Prepare a customer profitability report dated for the year ended December 31, 20Y8, showing (1) the operating income after customer service activities, (2) the gross profit as a percent of sales, and (3) the operating income after customer service activities as a percent of sales. Prepare the report with a column for each customer. Round percentages to the nearest whole percent. Metroid Electric Customer Profitability Report For the Year Ended December 31, 20Y8 Customer 1…
Vulcan Company's contribution format income statement for June is es follows: Vulcan Company Income Statenent For the Month Ended June 30 Sales Variable expenses Contribution margin Fixed expenses $ 9e0, e00 488, 00e 492, 800 455,000 Net operating income $ 37,000 Management is disoppointed with the company's performance and is wondering what con be done to improve profits. By examining soles and cost records, you have determined the following: a. The company is divided into two sales territories-Northern and Southern. The Northern Territory recorded $400,000 in sales and $168,000 in variable expenses during June; the remaining sales and variable expenses were recorded in the Southern Territory. Fixed expenses of $204,000 and $120,000 are traceable to the Northern and Southern Territories, respectively. The rest of the fixed expenses are common to the two territories. b. The company is the exclusive distributor for two products-Paks and Tibs. Sales of Paks and Tibs totaled $210,000 and…