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You have been asked to attend the corporate meeting next week to discuss the performance of your division. To help you prepare for the meeting, you requested the following information from the Chief Financial Officer.
Balance Sheet
A
B
C
D
E
1
Assets
2008
2
Cash
$14,000
3
Short-term investments.
71,632
4
Accounts receivable
878,000
5
Inventories
1,716,480
6
Total current assets
$2,680,112
7
Gross fixed assets
1,220,000
8
Less: accumulated depreciation
383,160
9
Net fixed assets
$836,840
10
Total assets
$3,516,952
11
12
Liabilities and equity
13
Accounts payable
$359,800
14
Notes payable
300,000
15
Accruals
380,000
16
Total current liabilities
$1,039,800
17
Long-term debt
500,000
18
Common stock (100,000 shares)
1,680,936
19
Retained earnings
296,216
20
Total equity
$1,977,152
21
Total liabilities and equity
$3,516,592
22
23
24
Sales
$7,035,600
25
Cost Of Goods Sold
5,800,000
26
Selling and Administrative Expenses
612,960
27
Depreciation
120,000
28
Total Operating Costs
$6,532,960
29
EBIT
$502,640
30
Interest Expense
80,000
31
EBT
$422,640
32
Taxes (40%)
169,056
33
Net Income
$253,584
34
35
36
Stock Price
$6.00
37
Shares Outstanding
100,000
38
EPS
($0.95)
39
DPS
$0.11
40
Tax Rate
40%
41
Book Value Per Share
$7.91
42
Lease Payments
$40,000
43
44
Statement of retained earnings, 2008
45
Balance of retained earnings, 12/31/2007
$203,768
46
add: net income, 2008
($95,136)
47
less: dividend paid, 2008
($11,000)
48
Balance of retained earnings, 12/31/2008
$97,632
49
50
Master Budget for 2008
51
Sales (350,000 units of A @ $15 and 350,000 units of B @ $5)
$7,000,000
52
Cost of goods sold
5,810,000
53
Contribution margin
$1,190,000
54
Selling and Administrative expenses
155,000
55
Operating income
$1,035,000
56
57
Standard variable manufacturing cost per unit:
58
Product A
Product B
59
Direct Materials
10 pieces @ $.50
$5.00 per unit
5 pounds @ $.30
$1.50 per unit
60
Direct Labor
1 hour @ $3.00
$3.00 per unit
.3 hours @ $2.50
.75 per unit
61
Variable overhead
1 hour @ $2.00
$2.00 per unit
62
Total
$10.00 per unit
63
64
Actual variable manufacturing cost:
65
Materials
$2,519,000
(5,038,000 pieces)
66
Labor
1,509,000
( 503,000 hours)
67
Overhead
1,006,000
68
4,530,000
(3,020,000 pounds)
69
150,000
( 200,000 hours)
70
71
$9,864,000
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