Question 1: Manufacturing income statement, statement of cost of goods manufactured
Several items are omitted from each of the following income statement and cost of goods manufactured statement data for the month of December 2012:
|
Tom
Company |
Jerry
Company |
| Materials inventory, December 1 |
$187,200 |
$118,000 |
| Materials inventory, December 31 |
(a) |
120,000 |
| Materials purchased |
475,200 |
228,000 |
| Cost of direct materials used in production |
501,600 |
(a) |
| Direct labor |
705,600 |
(b) |
| Factory overhead |
218,400 |
120,000 |
| Total manufacturing costs incurred during December |
(b) |
690,000 |
| Total manufacturing costs |
1,785,600 |
985,000 |
| Work in process inventory, December 1 |
360,000 |
295,000 |
| Work in process inventory, December 31 |
302,400 |
(c) |
| Cost of goods manufactured |
(c) |
683,000 |
| Finished goods inventory, December 1 |
316,800 |
136,000 |
| Finished goods inventory, December 31 |
331,200 |
(d) |
| Sales |
2,760,000 |
1,117,000 |
| Cost of goods sold |
(d) |
701,000 |
| Gross profit |
(e) |
(e) |
| Operating expenses |
360,000 |
(f) |
| Net income |
(f) |
256,000 |
Instructions
1. Determine the amounts of the missing items, identifying them by letter.
2. Prepare a statement of cost of goods manufactured for Jerry Company.
3. Prepare an income statement for Jerry Company.
Question 2: Contribution margin, break-even sales, cost-volume-profit chart, hia safety, and operating leverage
Blythe Industries Inc. expects to maintain the same inventories at the end of 2012 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during 2012.
A summary report of these estimates is as follows:
|
|
Estimated
Fixed Cost
|
Estimated Variable Cost
(per unit sold)
|
|
Production costs:
Direct materials......................................
Direct labor ...........................................
|
|
$30
20
|
|
Factory overhead...................................
|
$340,000 |
11 |
|
Selling expenses:
|
|
|
|
Sales salaries and commissions...............
|
80,000 |
5
|
|
Advertising............................................
|
32,000 |
|
|
Travel ..................................................
|
8,000 |
|
|
Miscellaneous selling expense..................
|
7,600 |
5 |
|
Administrative expenses:
|
|
|
|
Office and officers' salaries .....................
|
120,000 |
|
|
Supplies.................................................
|
8,000 |
2 |
|
Miscellaneous administrative expense.......
|
4,400 |
2 |
|
Total ....................................................
|
$5600 000 |
575 |
It is expected that 8,000 units will be sold at a price of $200 a unit. Maximum sales within the relevant range are 9,000 unit
Instructions:
1. Prepare an estimated income statement for 2012
2. What is the expected contribution margin ratio?
3. Determine the break even sales in units & dollars
4. Construct a cost-volume profit chart indicating the break even sales
5. What is the expected margin of safety in dollars and as a percentage of sales?
6. Determine the operating leverage