Blarney Corporation expected to sell 150,000 games during th…
Blarney Corporation expected to sell 150,000 games during the month of November. The following budgeted data are based on that level of sales: Revenue (150,000 games) $2,400,000 Variable expenses 1,425,000 Fixed manufacturing overhead expenses 250,000 Fixed selling & administrative expenses 500,000 Net operating income 225,000 Calculate the contribution margin ratio. Calculate the operating leverage. Blarneys’ actual sales during November were 200,000 games. What should the actual net operating income during November have been?
Read DetailsClient Letter Scenario: You attend church with a good frie…
Client Letter Scenario: You attend church with a good friend Tony Maroni, and after the Sunday morning service he asked for advice. You are a successful financial planner and accountant, and people at the church seem to always seek your free counsel. Tony’s Trophy Shop has been struggling to stay in business since the economic shutdown caused by the coronavirus. Currently, he is selling 25,600 trophies each year at a price of $12 each to make a meager profit. He has plenty of excess capacity, but new market opportunities are scarce. Last week, Skip Tumalu contacted Tony and asked him to provide 450 trophy’s for the elementary school track meet that will be held this year at the local university, Watsamata U. Skip needs 450 trophies since it is a Federal mandate that all athletes receive a participation award. He also told Tony that this is the last year of athletics at any elementary school due to state budget cuts and wanted to make it a special event for the children. Skip is able to get the trophies from China for $7 each, but was hoping to keep the business local. His father was a marine and told him to always buy American. If Tony can match the $7 price, the order is his. Tony’s bookkeeper, M. Besler, told him not to take the order since his costs to produce a trophy exceeds the $7 special order price. However, Tony was still considering taking the order at a loss in order to help the school deal with the budget crisis. He once heard from a wise CPA that you should use the numbers to help make decisions – don’t let the numbers make the decision for you. M. Besler used the following information to arrive at his conclusion: Cost of Goods Manufactured: Total Cost Unit Cost Direct Material 40,960 1.60 Direct Labor 44,800 1.75 Manufacturing Overhead* 106,240 4.15 Total Manufacturing Costs 192,000 7.50 * $90,880 of the Manufacturing Overhead is fixed. The bookkeeper also pointed out that according to the employment agreement with Sal Vadore, a $0.50 per unit commission must be paid on all sales. According to M. Besler, commissions are period expense (not product costs) and therefore irrelevant to the analysis. Required: Prepare a well written letter to Tony Maroni, at 246 Ate Street, San Diego, CA, that identifies all of the relevant issues, addresses the reasonableness of M.Besler’s conclusion, and provides viable alternatives and recommendations for consideration. Limit your response to 500 words. The letter will be graded and assessed on clarity and completeness.
Read DetailsApple Company, which has only one product, has provided the…
Apple Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $142 Units in beginning inventory 0 Units produced 2,500 Units sold 2,300 Units in ending inventory 200 Variable costs per unit: Direct materials $22 Direct labor $57 Variable manufacturing overhead $1 Variable selling and administrative $6 Fixed costs: Fixed manufacturing overhead $82,500 Fixed selling and administrative $41,400 What is the total period cost for the month under the variable costing approach? What is the total period cost for the month under the absorption costing approach? What is the net operating income for the month under variable costing? What is the net operating income for the month under absorption costing?
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