How should you evaluate macgivers annual report in light of

Assignment Help Accounting Basics

Reference no: EM13602820

MacGiver Brass is a brass plating firm with sales of $8 million and profits before taxes of $625,000. MacGiver has a loan outstanding at its local bank for working capital purposes. As the loan officer reviewing MacGiver's loan application, you are charged with making a recommendation as to whether the $608,000 loan should be renewed for another year.

Upon reviewing MacGiver's most recent annual report, you find the following footnote:
Underabsorbed overhead of $462,000 was prorated to inventories (2?3) and cost of goods sold (1?3).

Required:

a. How should you evaluate MacGiver's annual report in light of this footnote? In particular, how does this footnote affect your recommendation regarding the loan?

b. In preparing for your meeting with MacGiver's president and chief financial officer, what questions do you want to ask regarding this footnote?

Reference no: EM13602820

Questions Cloud

Determine the markup percentage round to two decimal places : based on the data presented in exercise 25-15 assume that sirrus phone company uses the variable cost concept of

Sanford co sells 500000 of 10 bonds on march 1 2010 the : in each of the following independent cases the company closes its books on december 31.1. sanford co. sells 500000 of

The man-hour estimate for test and evaluation was based on : the man-hour estimate for test and evaluation was based on using expert opinion to come up with optimistic pessimistic

Calculate the unit manufacturing cost of the us and eu : wedig diagnostics manufactures two laser photometers that are used in preparing dna tests. the u.s. model is designed

How should you evaluate macgivers annual report in light of : macgiver brass is a brass plating firm with sales of 8 million and profits before taxes of 625000. macgiver has a loan

On dec 31st company abs has contributed capital 20000 : on dec 31st company abs has contributed capital 20000 sales revenue 95000 total assets 85000 no dividends and total

How much overhead was absorbed to products in the naples : the densain water plant in naples florida bottles purified and flavored waters in a variety of sizes 20 36 48 and 64

What are value-added processes how do you determine if a : what are value-added processes? how do you determine if a process adds value? how does identification of value-added

Early in january 2010 tellco inc acquired a new machine and : early in january 2010 tellco inc. acquired a new machine and incurred 100000 of interest installation and overhead

User Account

All Pages