Reference no: EM132828587
Problem - Tami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University.
Tami's Creations, Inc. Income Statement For the Quarter Ended March 31
|
Sales (28,300 units)
|
|
$1,132,000
|
Variable expenses:
|
|
|
Variable cost of goods sold
|
$461,290
|
|
Variable selling and administrative
|
183,950
|
645,240
|
Contribution margin
|
|
486,760
|
Fixed expenses:
|
|
|
Fixed manufacturing overhead
|
281,700
|
|
Fixed selling and administrative
|
218,560
|
500,260
|
Net operating loss
|
|
$(13,500)
|
Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter.
At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:
Units produced
|
31,300
|
Units sold
|
28,300
|
Variable costs per unit:
|
|
Direct materials
|
$7.10
|
Direct labor
|
$7.70
|
Variable manufacturing overhead
|
$1.50
|
Variable selling and administrative
|
$6.50
|
Required -
1. Complete the following:
a. Compute the unit product cost under absorption costing.
b. What is the company's absorption costing net operating income [loss] for the quarter?
c. Reconcile the variable and absorption costing net operating income [loss] figures.
2. During the second quarter of operations, the company again produced 31,300 units but sold 34,300 units. (Assume no change in total fixed costs.)
a. What is the company's variable costing net operating income (loss) for the second quarter?
b. What is the company's absorption costing net operating income (loss) for the second quarter?
c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.
Prepare a weeklong science unit plan
: For this course, you will prepare a weeklong science unit plan. Each assignment will scaffold to create the benchmark. Each week, for each assignment.
|
What is the weighted average cost of capital
: The respective rates are 15% common stock, 3% bonds (after tax) and 4% preferred stock. What is the weighted average cost of capital?
|
What relationship between the various costs and expenses
: Gross Profit margin, What information does provide in terms of the relationship between the various costs, expenses, and taxes with sales?
|
Why does the common stock investor demands a higher dividend
: There are two primary means to earn income as a stockholder. The first method is dividend income and the second method is earnings from capital gains
|
Compute the unit product cost under absorption costing
: At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Compute the unit product cost under absorption costing
|
What is the initial margin requirement
: An investor writes ten naked put option contracts. The option price is $6.00, the strike price is $100.00, and the stock price is $95.00. What is the initial ma
|
What little actions might you take
: Common-sense actions you might consider taking at this stage in order to move forward? Even if big actions seem premature, what little actions might you take
|
Explain the details of derivative-based hedging strategies
: Explain the details of derivative-based hedging strategies that can be applied in your field of work. What are the benefits and potential risk factors
|
What is meant by the liquidity of the equity market
: What is meant by the liquidity of the equity market? Explain why liquidity in the secondary market is important to both shareholders and to the corporation.
|