User Account

All Pages

prepare an income statement, Managerial Accounting

Assignment Help:

Adm2341 manufactures and sells four different products. The following data are extracted from the most recent financial statements:

 

Products

 

A

B

C

D

Sales

Cost of goods sold

   Direct materials

   Direct labour

   Manufacturing overhead

S&A expenses

Operating income

$2,500,000

 

300,000

500,000

     600,000

 300,000

800,000

$2,000,000

 

400,000

600,000

     800,000

300,000

(100,000)

$1,500,000

 

200,000

400,000

     900,000

150,000

(150,000)

$   4,000,000

 

900,000

1,600,000

  300,000

 500,000

700,000

For each product, 50% of manufacturing overhead is variable costs and variable S&A expenses are equal to 10% of sales. The remaining portion includes traceable and common fixed costs.

The company is considering disposing of the Product C since it has been consistently unprofitable for a number of years. Admw2341's Management team approached you for help and advice on this matter.
 
REQUIRED

1) Prepare an income statement showing the appropriate performance of each product.

2) Adm2341's Top management asked you to provide them with a "decision rule" they could apply regarding Product C. Identify any additional information needed to implement your "decision rule".

3) To rationalise your decision on Product C, you have collected the following data:

 a) If product C is eliminated, Product D annual sales will increase by $10%. The Variable cost structure and S&A fixed expenses will be unchanged.

 b) If Product C is eliminated, Product A annual sales will drop by 10 %. The  Variable cost structure and S&A fixed expenses will be unchanged.

 c) If Product C is dropped, the management of the company feels it can save annually a total of $200,000 of fixed manufacturing overhead and S&A expenses.

Do you recommend to Adm2341's Management to drop Product C? Why ?

Related Discussions:- prepare an income statement

How much must you deposit each year to reach your goal, Right now you are 2...

Right now you are 20 years old and you have decided that you want to have $2,000,000 in the bank when you turn 65 years old. How much must you deposit each year to reach your goal

Explain the break even point pricing, Break even point or B.E.P. pricing me...

Break even point or B.E.P. pricing method : Break even point is the volume of sales at which the total sale revenue of the product is equal to its total cost. In other words, it

Lease accounting, question:lease accounting implicit rate unknown,20%increm...

question:lease accounting implicit rate unknown,20%incremental rate leaseterm 4 years,find implicit rate using trial and error method.i know nothing about trial and error method in

Explain sales budget, Explain Sales budget A sales budget is an estimat...

Explain Sales budget A sales budget is an estimate of expected sale during a budget period. A sales budget is known as a nerve center or backbone of the enterprise. The degree

Cash forecasting and budgeting, A cash budget is one of the main important ...

A cash budget is one of the main important devices to plan and control cash payments and receipts. In preparation of a cash budget the subsequent points are considered. Cred

Major features of jit, Major features of JIT (1) Elimination of non-val...

Major features of JIT (1) Elimination of non-value added activity:   JIT manufacturing can be described as a philosophy of management, dedicate to the elimination of waste. Wa

Transportation problem-solution, Transportation Problem-Solution Soluti...

Transportation Problem-Solution Solution of the Transportation Problem: The fundamental steps of the transportation method are: Step 1:       Determine a preliminary b

Variables, Variables Unrestricted variable Yi can be expressed in terms...

Variables Unrestricted variable Yi can be expressed in terms of two non-negative variables by using the substitution: Yi = Yi' - Yi'', Yi', Yi'' ≥ 0 The substitution

Relevant Cost, Outline Five characteristics of relevant cost

Outline Five characteristics of relevant cost

Kinematic pair-kinematic element-resistant body , Kinematic Pair: A pair ...

Kinematic Pair: A pair is a joint of two elements which permits relative motion. The relative motion among the elements of links that built a pair is needed to be fully constrain

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd