Calculate revenues expenses and operating profit in year one

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Reference no: EM13903878

Alternative revenue recognition points

The Tell Company manufactures a novel apple-shaped archery target. Each archery target costs A6 to produce and A1 to sell. The selling costs are period costs and are incurred (and recognised) when targets are delivered to retailers. Tell sells them at a price of A10 each. All sales are on account. Data on production, delivery and cash collection in the first and second years of the company's existence are summarised below:

	Year 1	Year 2
Units produced	10,000	8,500
Units delivered	8,000	9,500
Cash collected	A75,000	A87,000

Required

Calculate revenues, expenses (production and selling expenses) and operating profit in years 1 and 2, assuming Tell recognises revenue:

(a) when units are produced;

(b) when units are delivered;

(c) when cash is collected.

Reference no: EM13903878

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